Let's Talk Money

July 19th, 2026.

Episode Transcript

Speaker 1 (00:01):
Good morning everyone. My name is Martin Shields and I'm
going to be your host today. Let's talk money.

Speaker 2 (00:07):
As always, it's great to be here with you on
this summer morning to answer any of your financial planning
or investment management questions and then encourage you to call
in with those questions. You can reach me at eight
hundred Talk Wy that's eight hundred eight two five five
nine four nine, Or if you're too shy to get
on the radio, you can email me at ask Bouche

(00:31):
at bouchet dot com. That's ask Bouche at Bouche dot
com and Bouchet spelled b o U c h E. Y.

Speaker 1 (00:41):
Well, folks, it's as always, it's great to be here
with you.

Speaker 2 (00:44):
I always love being on for this hour to provide
some insights as to what's going on with the markets
and to answer any of your questions.

Speaker 1 (00:50):
I hope that you're doing well.

Speaker 2 (00:52):
As I look out the window here, we've got a
predecent start to the morning. Hopefully we'll avoid any of
the smoke, you know, just really, I hope there's not
a sign of things to come, because you know, when
those days hit when it's really smoky. I think it
was Tuesday or Wednesday, it looked like it was armageddon.
It was almost green out there. So it's great to

(01:14):
have some blue sky and some sun and you know,
get that out there and enjoy the day. Interesting week
in the markets, they did not do so well. Yeah,
the S and P five hundred, it was down just
about over about one and a half percent, and the
Nasdaq one hundred was down over four percent. Now they're
both still doing very well for the year. The SP

(01:36):
five hundred is up nine percent for the year and
the Nasdaq one hundred is up thirteen percent for the year,
So still doing very well. Nothing too major. There was
some news that came out about about AI software that
was very powerful coming out of China, and that tends
to throw a little wrinkle into you know, the ship

(02:00):
trade that's going on here, and you know the technology
trade that's going on in the US. But you know,
the earnings just continue to be stellar. And matter of fact,
the earnings growth for this year is going to be
about thirty two percent. Thirty two percent, that's gonna be
the earnings growth for the SP five hundred this year.
To give you a comparison, You usually only see that

(02:23):
type of earning growth when you're coming out of a
recession where earnings have really taken a hit, so you know,
coming out of the tech bubble or coming out of
COVID or the financial crisis where earnings really took a hit.
Then as they started to grow out of there those
those low, low levels, you could see strong earning growth

(02:43):
at this level that we're talking about. But to have
the market have done as well it's done, you know,
the last sixteen years and certainly the last five years,
and to see earnings grow by that much is really
quite amazing. And you know, it's it's across many sectors,
but certainly it's across the technology sector. I mean, that's

(03:04):
the thing about these tech companies, whether it's chip manufacturing
or some of the other spaces, their earnings are just tremendous.
The profit margins in some cases are up to sixty
seventy percent, So you think about that, every dollar that
these companies earn, they're getting sixty to seventy percent in

(03:26):
profits from those dollars. So just shows you the real
strength of these companies. And you know the reason for
that is there's concern out there from investment perspective that
they can continue to have growth at the level that
they've seen, and you're seeing that a little bit right,
which is some of these companies, like Navidia, they were

(03:46):
the only game in town, but now other companies are
getting into that chip space, so that's you know, it's
to be expected basically.

Speaker 1 (03:55):
But again we always talk about this.

Speaker 2 (03:57):
The most important thing with the markets are what are
the current cash flows and profits and what are the
expectations for the next six, twelve and eighteen months. And
you know, the market's always looking forward. So if things
are still good in that regard, which they are, then
you know the market can keep moving higher. The other thing,

(04:18):
from a broader economic perspective, things are good. You're starting
to see inflation pull back a little bit. Now we'll
see with the war escalating back up and around what
that means to oil prices. But if we can put
that behind us and we can kind of get some
stabilization in the energy market, I think you'll see inflation

(04:39):
pull back, which will allow to fed to the very minimum,
maybe not lower rates, but keep rates where they are,
which would be beneficial for the market to the economy,
and the.

Speaker 1 (04:49):
Labor markets continue to be very strong as well.

Speaker 2 (04:52):
Very resilient, you know, and it is interesting when you
look at the labor markets, you know, the last fifteen
years since the Great Recession. You know, you had, of
course the COVID blip, but otherwise beyond that, you know,
if you just had a labor market that has continued
to trend downwards. So unemployment hit low in the three

(05:12):
point five percent range. Now it's in the four percent range,
but it's been stable at four percent, in the four
percent range, and you know, there's certainly some challenges out
there for certain demographics.

Speaker 1 (05:23):
We've talked about this.

Speaker 2 (05:24):
Uh, you know, we're really seeing a situation where recent
graduates from college are struggling relative to the broader market
of employment. Their unemployment rate is higher than the broader market.
So it's not all groups that are doing well. But
broadly speaking, uh, the labor markets are showing a lot

(05:46):
of strength. And that's that's important. You know, the US
consumer makes up seventy five to eighty percent of the
US economy, So to the extent that, uh, they're showing
a lot of strength, that's a that's a real positive. Well,
we have a question that came in through our email
and from David. It says, he's talked about direct indexing,

(06:08):
and with that, if there's an additional cost versus the
one percent feed for our services. So let's take a
step back and talk about direct indexing. Direct indexing is
something we offer our clients where you can do basically
get exposure to the SP five hundred to the Nasdaq,

(06:31):
but you're doing it through we basically use of a
firm that allows us to get access, but you're buying
individual stocks to do that. Right, So, for example, in
the SP five hundred, there are five hundred companies, but
with direct indexing, the company that we're using Canvas, they
basically are buying about one hundred hundred and fifty companies

(06:54):
and that basically tracks very closely to the.

Speaker 1 (06:57):
SP five hundred.

Speaker 2 (06:59):
But what they're doing I mean then is as there's
volatility in the market. So let's say they're buying these
positions and then the market pulls down, either across the
broad market or in particular sectors, they're selling those at
a loss, harvesting those losses and buying similar positions in
that sector that will move up higher as the market

(07:22):
recovers or that sector recovers. So basically it's Basically, it's
called the tax alpha strategy, So you're basically going to
get The goal is to get performance that tracks these
indices like the Nasdaq, like small cap like the SP
five hundred, but at the same time capture losses that

(07:43):
you can use to offset future gains. And you know,
that's really important. It's very nice when you can have
these gains in your portfolio and then if you need
to sell something, you can use the losses that are
harvested and at the same time have that really that
index performance.

Speaker 1 (08:01):
So it's a really this has been a great addition.

Speaker 2 (08:03):
I was explaining this to a client the other day
and they're like, is there any reason why I would
not have this, and in.

Speaker 1 (08:10):
General, there's not.

Speaker 2 (08:11):
Right. It's basically you're going to get the performance of
the broader market while at the same time capturing losses
to offset future gains. And where this works really well too,
is when we have clients that have concentrated stock positions.
We are able to take these losses that are harvested
and then sell some of those content trade stock positions

(08:33):
without creating a gain because we can offset the gain
with these losses. So again it's it's great just in
general from a performance perspective and a tax perspective, but
in particular with clients that have concentrated stock positions and
trying to move out of those positions without creating substantial gains.

(08:56):
And so Todavid's question, is there an additional cost for
the next thing, And the answer is yes, it's about
eighteen basis points and so just under one fifth of
one percent is the cost. But for our clients, that's
about the average cost of our portfolio. So you know
we use if you listen to the show, you know

(09:17):
that we use exchange creative funds ETFs. Those are what
we primarily use, our ETFs, and that inn ETF is
going to have a cost to it, right, So whether
it's Vanguard or Schwab or Power Shares or First Trust,
these firms put together these indices and these ETFs, and
then we take those ETFs and build a portfolio. Usually

(09:41):
it has about fifteen ETFs in a portfolio. And then
if you took at the weighted cost of those ETFs,
it's right around there, it's right around eighteen basis points.

Speaker 1 (09:53):
And so you know, we have some that have very low.

Speaker 2 (09:56):
Costs, like our broad exposure to the sp five hundred
that is point zero three percent, so one thirtieth of
a percent, so very that's very inexpensive.

Speaker 1 (10:07):
And then others where we're maybe providing some hedging, some.

Speaker 2 (10:13):
Other strategies, they're gonna be a little bit more expensive,
maybe twenty twenty five thirty basis points. So the weighted
average of our portfolio is around eighteen basis points, and
that is the cost of the direct indexing is the
about eighteen basis points. So it's the same cost relatively speaking,
as you know, the weight that average costs for our ETF,

(10:34):
so it's not in addition to that, but there is
the fee that exists along with our one percent fee.
So then let's move on from there. You know, one
of the things I want to talk about is the
planning that we're doing with clients, and you know, we're
constantly looking at their financial picture and giving guidance is

(10:59):
to you know, what they should be doing where their
client's personal CFO.

Speaker 1 (11:03):
We're there. I always say we're their.

Speaker 2 (11:05):
Financial quarterback, uh, And you know, any given week we're
meeting with a number of different clients and giving them
that guidance. And I think one of the big things
that we're looking at is from a holistic perspective, right.

Speaker 3 (11:19):
UH.

Speaker 2 (11:20):
And you know, had a number of different client situations
this week where were given that guidance. And you know,
to me, this is why I love my job is
you know, when people come to us, they have very
complex situations. They're not really clear as to how they
should be approaching them. Uh, and then we're able to
give them that guidance is to hey, here's that clarity

(11:41):
and lay out that plan.

Speaker 1 (11:42):
UH.

Speaker 2 (11:43):
And in one particular case, UH, you know, a small
business owner. You know they're looking to transition the business
to the next generation. And you know they're able to
you know, do this that transition through you know, our
our guidance on it. And so for us, what we're
doing is we're engaging uh in a state planning attorney

(12:05):
for them UH to give them guidance. We're engaging a
business attorney UH to help with that transition. We're working
with their t PA on their full and K plan
and their defined benefit plan.

Speaker 3 (12:19):
UH.

Speaker 2 (12:20):
We're working with our CPA on their business taxes. So
bringing all these advisors together, that's where that real value
is to help provide clarity.

Speaker 1 (12:32):
And you know, I will tell you.

Speaker 2 (12:33):
It's almost to a t when we get done with
a meeting with our clients. Uh, you know how powerful
that is to be able to uh give them that
clarity and you know, be able to see that roadmap
for them.

Speaker 3 (12:46):
Uh.

Speaker 2 (12:46):
And to me, that's I love that, you know, when
you have those meetings, it's such a powerful meeting uh
and positive too. And that's why I always say, you know,
for me at least to be able to work in
an industry.

Speaker 1 (12:58):
With a firm where where.

Speaker 2 (13:00):
You know, in general, most of our discussions are really positive.
You know, there's sometimes they can be difficult discussions. If
somebody's spending too much or they're not saving enough. We've
got to be very clear with them that, you know,
just like a doctor would be that, hey, listen, if
you keep doing this, you're going to be in a
bad spot and you don't want that to happen. So

(13:21):
we're going to give you clarity on it. But for
the most part, our conversations are very positive to the
extent that our clients are already doing the right things
with our guidance. They're saving enough money, they're being invested
in a proper way, and so a lot of it
is talking about Hey, as you move into that next chapter,
whatever that may be, this is what it's.

Speaker 1 (13:41):
Going to look like.

Speaker 2 (13:42):
And that's that's a really positive discussion that to me,
I'd love to be able to have those those conversations
with our clients. Well, folks, we're gonna go to commercial break,
but come back and join us as we take your questions.
You're listening to Let's Talk Money, brought to you by
Bouchet Finance Troupe. Well, we help our clients prioritize their
health while we manage their wealth for life.

Speaker 1 (14:03):
Welcome back, folks.

Speaker 2 (14:05):
As always, if you have any questions, give me a call.
You can reach me at eight hundred eight two five
five nine four nine. That's eight hundred eight two five
five nine four nine, or you can shoot me an
email at Askbouchet at Bouchet dot com. So, as I've
been talking here, my colleague Steven Bouchet, who's usually on

(14:27):
the on the show with you, but he's taking a
little bit bit of a break, but he's listening right now.
And one of the things he texts to be with
is just to let any of the listeners know that
he himself is actually using the direct indexing and he
loves it.

Speaker 1 (14:44):
And we always were very transparent and anybody that comes in.

Speaker 2 (14:50):
That is a perspective client and wants to get understanding of,
you know, how we're managed a portfolio or in particular,
let's say in the direct indexing, Steve will actually show
him his portfolio and exactly what's in there and the
value that it's providing, both from a performance perspective and

(15:10):
also from a tax alpha perspective.

Speaker 1 (15:12):
And you know, I will say, as.

Speaker 2 (15:14):
His colleague, I think that transparency, it can be very valuable.
There's we we always talk about this. There's nothing we're hiding. Uh,
there's no black box. We're very transparent with how we
operate and you know, both from a planning perspective, but
from an investment perspective and certainly with Steve, which showing
any perspective client his his IRA account and or his

(15:38):
direct eddixing account, so they you understand very clearly. You know,
this is a real life situation of the performance numbers
but also the tax loss harvesting h and it's it's
really valuable. And you know, this direct indexing is something
new in the last you know, two or three years,
we've been rolling out more and more with our clients,

(16:01):
and it can be very powerful. You know, frankly, it's
really a function of technology, right. You know, our partner, Canvas,
is able to do this because of the technology that exists,
and you know, it just it seamless to our clients
that they can get that basically index performance with the

(16:21):
tax alpha on top, we're gonna get the phone lines
we have Rich from half Moon, Richie.

Speaker 4 (16:27):
There, Yes, I am good, quite well. I read the
post this morning. The war is intensifying in Iran, so
I know that's gonna put a thing into the market.
But I did hear also earnings are strong, the economy
is doing strong, so you just got a weather through this.

Speaker 2 (16:45):
Yes, I mean, you know, I think we've seen this
all year long, right, which is, you know, even though
this war has been going on for months and certainly
longer than most people had anticipated or want it to be,
you know, the US economy continues to do very well.

Speaker 1 (17:00):
Now.

Speaker 2 (17:01):
I think the challenge that exists is, you know, as
you have higher oil prices and they've started to move
back up, you know, it does impact inflation, and you know,
we were starting to see that as the war was
going on and then you saw how quickly things changed
though when there was basically a peace agreement in place,

(17:21):
a temporary one, but of course it hasn't held, and
you know you're starting to see oil prices go back up.
All I will tell you is that I think again,
I do think.

Speaker 1 (17:31):
There's going to be resolution.

Speaker 2 (17:33):
The US or Iran does not want this conflict to continue,
so at some point there will be resolution. I think
that will allow oil prices to come back. And I
don't think that you're going to see the Federal Reserve
raise interest rates. I think it'd be if you look
at the odds of something happening, the most likely scenario
is the Fed keeping rates constant, but the least likely

(17:57):
is for them to be raising them the current environment.

Speaker 1 (18:01):
So yeah, you know, Rich, I feel pretty comfortable that.

Speaker 2 (18:05):
We're in an economy that continues to be very strong
and markets we're earning continue to grow. And the big
element we've talked about this is you know, you never
want to be, you know, trying to time the market,
but you know, depending on what's going on in your
life situation, you may be making adjustments, uh to your allocation,
which is the right one going forward? Right? So you know,

(18:28):
as you're getting close to retirement, is we're you know,
near market all time highs, it's not a bad time
to rebalance and adjust your portfolio for that new allocation
as you retire or if you need distributions from your portfolio,
it's not a bad time to raise some cash as
again the market's near all time highs.

Speaker 4 (18:48):
Yeah, just signed that on. Following up on that, I'm
pretty heavy in the equities and how what is your
rule or what do you recommend about how much liquid
cash you have should be have available cover a year
two years of expenses in case there's a downturn in
the market and you can write it out.

Speaker 1 (19:08):
Yeah, so great question.

Speaker 2 (19:10):
So, first of all, we always recommend that you have
an emergency reserve fund, which is money.

Speaker 1 (19:14):
Just set aside in cash.

Speaker 2 (19:16):
You know, you can put in some CDs or whatever,
but have it very liquid that you could access if
you needed.

Speaker 1 (19:22):
You know, a large amount of money that you weren't expecting.

Speaker 2 (19:24):
Yeah, a new roof, new you know, air conditioning, whatever
the case might be. And that varies either you know,
three to six months if you want to be a
little more conservative, six to nine months of cash flow,
or you know, more on the high end twelve months,
so you can have that set aside ready to go. Now,
the way we manage distributions for our clients is we
put away two years with the distributions into more conservative

(19:47):
fund I should say, up to two years with the distributions,
and that you know, both from income from the portfolio,
from bond income and dividends.

Speaker 1 (19:56):
We replenished those two years.

Speaker 2 (19:58):
And then you know, when the markets are hitting all
the time highs like they are, will also sell a
little bit and across the portfolio to replenish that bucket.
So we feel very comfortable with that right having your
emergency reserve fund, having this two years set aside, and
even with a portfolio, let's say, you know, even an
eighty twenty portfolio. You know, for us, at least that

(20:21):
twenty percent that's in bonds, cash and alternatives, that bond
allocation is pretty conservative, right. We don't take a lot
of risk with bonds, so if somebody needed additional money,
you could go after that. But you know, that's you know,
that's about where we recommend as far as having some
liquid funds to provide for cash flow.

Speaker 4 (20:43):
So emergency liquid funds, I understand and then you can
have money set aside in a bond fund for more
of like a year or two. That's right, that's right, Okank,
thanks for that information. Appreciate it.

Speaker 1 (20:55):
Okay, you take care of Richard Joy did.

Speaker 2 (20:59):
Yeah, I think you know, And the big element with
our clients is they don't worry about this, right like, Okay,
you guys got this covered. We'll handle the mechanics of
making sure that gets replenished. You know, I will say
as an advisor, it's very fortunate with all of our
advisory team that we have an amazing investment team that
handles that for us. Make sure that our clients are

(21:19):
properly allocated, rebalanced appropriately, and that if they're taking distributions,
they have that distribution fund updated. And you know that's
that's important, right because and that's I think you know
where people get themselves in trouble is you know, they
have these ideas of doing doing this just like I described,
but quite often their implementation of it is not great.

(21:43):
And again for me, at least as a chief wealth
advisor here at the firm and speaking for the rest
of our advisors, you know, having our investment team take
care of that and they're they're fantastic, and make sure
that they're on top of it, makes it.

Speaker 1 (21:58):
A lot easier.

Speaker 2 (21:59):
And make sure that for our clients they have that
peace of mind that they can rest assured and sleep
comfortably that it's being handled properly.

Speaker 1 (22:07):
Well, folks, we're gonna go to commercial.

Speaker 2 (22:08):
Break, but come back and join us as we take
your questions. You'll listen to Let's Talk Money, brought to
you by Bruchet Financial Group. What we help our clients
prioritize their health, what we manage their wealth for life.

Speaker 1 (22:21):
Come back, folks and join us as a teen our discussion.
Welcome back, folks, for those of you just joining us.
My name is Martin Shields.

Speaker 2 (22:29):
I'm the chief Wealth Advisor at Bruchet Finance Group, and
i'm your host today for Let's Talk Money, and I'm
here to answer any questions you may have regarding your
fundage planning or investment management concerns. So I encourage to
call in and you could reach me at eight hundred
eight two five five nine four nine. Again that's eight
hundred eight two five five nine four nine, Or if

(22:52):
you're too shy to call in, you can email me
at ask Bouchet at Bouchet dot com, ask Bouche Bouchet
dot com. So either route you want to take, give
me a call, shoot me an email, and I'll give
you some guidance and insight.

Speaker 1 (23:08):
I have a caller, Steve B is calling.

Speaker 3 (23:14):
What Good morning, Marty. This is Stevie B.

Speaker 1 (23:17):
Steven. How are you. It's good to hear you.

Speaker 3 (23:20):
I'm doing good. Hello, folks. I know that you're used
to hearing me a lot of the weekends, but this
weekend I took off for good reasons. Yesterday Polo and
Vincenzo did a great show. Today Marty is always one
of the top. You know, when I'm not there, Marty
is always there to help me out and do the show.

(23:41):
And Marty, great show. Thank you, and thank you for
telling the listeners that any prospective client or current client.
My entire portfolio is invested just like our clients, except
for my Playbox accounts. I have a couple of Playbox
accounts that I play with, but my for the most
hardcore investments or invested just like our clients, and anybody

(24:04):
who wants to look at it, more than welcome to
look at it. Our advisors show our prospective clients exactly
what to expect and how my portfolio looks and so forth.
So thank you for telling everybody that. But Marty, I
just wanted to hop on, you know, folks, I wanted
to do the show this week, but I was in

(24:24):
New York City for most of the week. And you've
been listening to me two and a half years ago,
as you know, I went through some treatmentsand Boss, my
beloved wife's suit right in the middle of my treatments,
and I was off the radio for a long time.
Marty Ryan John, my shareholders and leadership team really took

(24:46):
over and did an amazing job, not only you know,
managing the firm, but doing radio and so forth. So
I thank you Marty and everybody else that helped out.
But I just wanted to let the listening audience know,
Marty from me that I came back from New York
City on Thursday night and as they say, and you

(25:09):
know it's emotional to say this, but they say, I'm
cancer free. And those are words that are just just
amazing words to hear, because when you joined the Sea Club, folks,
you are in that club for life, and it doesn't
discriminate it doesn't matter whether you take a bus or
car to work. It doesn't matter who you choose to love,

(25:31):
pray to, It doesn't matter how you address nothing matters
when it comes to the Sea Club. It doesn't discriminate.
It can hit any of us at any time. So
I was kind of in shock when they said you're
cancer free, and I decided to take the weekend to myself,
and that's why I'm not.

Speaker 4 (25:52):
On the show.

Speaker 3 (25:53):
So I just wanted to call in and thank Marty
for doing the show and Polo and Vincenzo yesterday and
the listening audience know why I'm not there. So Marty,
thank you for letting me hog up some of your
your informative time. And folks, as always, thank you for
listening and thank you for making this show really one

(26:15):
of the premiere shows throughout the country when it comes
to investing in money and any.

Speaker 4 (26:21):
Questions, say you ahead.

Speaker 3 (26:22):
So if you have any questions, folks, the bone mines
are open. One eight hundred eight two, five five nine
four nine one eight hundred eighty two five fifty nine
forty nine. Marty back to you.

Speaker 4 (26:35):
Thanks folks, you.

Speaker 2 (26:37):
Sound like a pro Steve Well. I want to say
you know Steve's colleague and his friend. I've been with
him now for more than fourteen years. Moved my family
up here from Virginia. My wife and I are both
must State New York. But when we moved up here,
our kids were little, little kids, and as Steve says,
I put my trust in faith in him and he

(26:59):
did the same for me.

Speaker 1 (27:01):
And I can't begin to say.

Speaker 2 (27:04):
You know, one how much I appreciate everything that has
come with our life, with moving up here and being
part of it with Steve, but also just how myself,
my family and our whole team is so happy to
hear the news that he's cancer free. And you know,
we've had it's been a challenge in two and a

(27:24):
half years with Steve having cancer treatment and Sue passing,
and then we lost our colleague Nicole Goebel as well,
so you know, all that together and like anything in life,
you've got to move through it.

Speaker 1 (27:37):
You got to move through it together.

Speaker 2 (27:40):
But we were ecstatic to hear the news this week
that things look very good for Steve and it's just great,
very glad he has.

Speaker 1 (27:48):
The weekend to enjoy it. Of course, he still loves
the show, always say he wants to. He's always listening.

Speaker 2 (27:54):
So but you know, Steve again can't tell you how
much how happy we are to have that. So well, folks,
let's move back on to our discussion, and again, if
you have any questions, you can reach me at eight
hundred eight two five five nine four nine, or you
can email me at Askbouchet at Bouche dot com. Now,
a couple of things I want to talk about again,

(28:17):
talk about, you know, these client situations and our role
as the personal CFO, but also financial quarterback and one
of the areas that we're getting involved with in helping
our clients as well is you know, we always have
a discussion about insurance, but we really haven't done too
much in the way of property and casually insurance and
now we're working with the more insurance agency to get

(28:40):
some guidance on that for our clients. And you know,
again it just goes to this broader idea of really
helping our clients in everywhere possible and in this situation,
basically doing just a review of their policies to make
sure that everything's in a great spot for our clients.
And that's something that's been you know, it's a good,

(29:02):
great addition for us to be able to offer that.
But one of the things I was talking about with
this one family that they have this business and they
have a full and K plan, but they also have,
you know, a profit sharing plan which just goes right
on top of the fall and K plan. In those situations,
as an owner, you can be putting up to you know,

(29:23):
potentially seventy two thousand dollars between your employee contributions that
you have, which is twenty four thy five hundred this year,
and then the additional amount that is the employee er.

Speaker 1 (29:35):
So that's basically a profit sharing component.

Speaker 2 (29:38):
But in this situation we also have they have a
defined benefit plan, and the way to think about that
is really it's a pension plan. But the real value
to that for in this case it's a very small business,
but very successful business that you can put up to
about two hundred and fifty thousand dollars tax free into the.

Speaker 1 (30:00):
Define benefit plan.

Speaker 2 (30:02):
And so you think about that the moneies they can
put in from a FEUR and K perspective, from a
profit sharing perspective, and then from a defined benefit plan.
I mean you're talking well into the three hundred thousand
dollars range of pre tax dollars that you're putting in
and you know, in this situation, they've had the plan
in place for a number of years. You know, it

(30:25):
really works well when either you're a sole practitioner or
you know, you have a smaller company. Our firm has
a defined benefit plan. It's a great benefit and you know, I.

Speaker 1 (30:38):
Just feel, you know, very fortunate.

Speaker 2 (30:40):
You know, we talk about the benefits of working here
at Bouchet that one of those is we have an
amazing retirement plan and that includes a defined benefit plan.
And but you know, this is something that we help
our clients with is putting these types of plans in place.

Speaker 1 (30:56):
But they're complex.

Speaker 2 (30:58):
We work with an outside a third party administrator TPA
UH and an outside actual ail UH to provide guidance
as to you know, how these plans should be run.
There's a lot of rules and guidance that need to
be followed with these plans and UH, you know, again
it's one of those things when it's done properly, UH,

(31:18):
you know, to see how much money uh these small
businesses are able to save in taxes by putting moneys
into these accounts.

Speaker 1 (31:26):
UH.

Speaker 2 (31:26):
And you know, in with our plan and also with
this company, they're benefiting their employees as well. Right, So
it's just not the execut not just the executive team
or the owners. Uh, it's anybody in that company that
benefits from these plans.

Speaker 1 (31:41):
And that's that's very powerful.

Speaker 3 (31:44):
Uh.

Speaker 2 (31:44):
And you know the other thing too, is that we
had these discussions with them on our you know, trying
to help out the kids, but the grand kids as well, right,
So it's multi generational as far as this guidance. And uh,
you know, one of things we're talking about is five
to twenty nine accounts and you know, they put enough
money away that their kids were you know, had a

(32:06):
decent amount in five twenty nine accounts that we were
able to do wroth contributions out of those accounts.

Speaker 1 (32:12):
Right.

Speaker 2 (32:12):
So that's where the rules have change over the last
number of years that you can, if you have access
funds into a five twenty nine plan, that you can
use those dollars right now it's at seventy five hundred
dollars a year and make a wroth contribution for a
total amount of thirty five thousand dollars. And that's a

(32:33):
really nice, you know, way to move those dollars from
a five to twenty nine plan into the raw to
benefit the beneficiaries. And in this case they're kids who are now,
you know, in their thirties, and one of the requirements
is those dollars have to be in a five to
twenty nine plan for at least fifteen years. And the

(32:53):
other nice thing too is there's no income phase out. Right,
So with other WROTH countrybutiance there is an income phase
out depending if you're single or if you're married as
to what exactly that income phase out is. But in
these situations moving money is from a five to twenty
nine plan into a ROTH, there are no income phase outs.

Speaker 1 (33:15):
They're able to make those contributions, so that was great.

Speaker 2 (33:18):
And then what we're gonna be able to do is,
because they still have extra dollars beyond that, move those
beneficiaries from the kids to the grandkids. And you know,
that's another great thing with five twenty nine plans is
unlike let's say an IRA, if you have a five
to twenty nine plan, it can move from multiple generations

(33:39):
and there's never a situation that those dollars have to
be taken out, so it can be a really powerful
estate planning tool as well, that you can put those
dollars in they grow tax free and as long as
they use for qualified educational expenses, and they can move
from one generation to the next, you can change the beneficiary.

(34:00):
But the other thing that we were looking at them for,
and we've talked about this before, our funding for the
grandkids trump accounts, and this can be very powerful. I
know my colleague Vincenzo has talked about this a lot
and has written about it quite a bit on both
LinkedIn and our blog.

Speaker 1 (34:19):
Where you can put up.

Speaker 2 (34:20):
To five thousand dollars per grandchild and that's doesn't matter
if the parent makes it or the grandparent or somebody else.
The five thousand dollars per grandchild per child is the
only that's the that's the amount you can make. Can't
be any more than that annually, but you can put
that in there, have it grow, and then the idea
is that you would do a Wroth conversion for them

(34:42):
in their early twenties, and if you're able to grow it,
you know, at a good rate and be consistent with
those contributions, you could be talking about a you know,
having them have a Wroth account in their early twenties,
that it would have over two hundred thousand dollars in there,
and that's really powerful. You think about this, If you
can start your working career with a wroth with over

(35:04):
two hundred thousand dollars, it's incredibly powerful. So that's another
strategy that we're working with our clients on. And you know,
one thing we would always say is, in general the
five twenty nine plan in particular, which is the case
with this family, if education is important and if you've
gone to college, maybe graduate school, the five twenty nine

(35:25):
plan is a great route the first fund and then
secondly is the Trump accounts. But you have to kind
of there are some nuances to it. So you know,
this is where you know you have to do the
analysis to show exactly how this is going to work out.
Because when you do that wrath conversion in your early twenties,
there's going to be a tax bill with that right,

(35:46):
so you have to have the liquidity to cover that
tax bill to make it work. But that that guidance
can be really valuable, and I think for this set
of clients it was extremely valuable.

Speaker 1 (35:59):
Let's move on to a couple well, other things I
want to highlight. Again.

Speaker 2 (36:02):
If you have any questions, you can give me a call.
You can reach me at eight hundred eight two five
five nine four nine. Again, that's eight hundred eight two
five five nine four nine, or you can email me
and ask Bouche at Bouchet dot com. Okay, I've got
a question from David uh he said.

Speaker 3 (36:23):
This is an email.

Speaker 2 (36:23):
He said, how is it that you became affiliated with
Bouchet group. Well, this is a great story. I was
living in Virginia and our kids were very little. When
they were youngest test was maybe three and all this
was as well as five or six, and I had
switched from corporate finance into wealth management.

Speaker 1 (36:44):
I wou love what I was doing.

Speaker 2 (36:45):
I was working for fee only firm down in Virginia,
and my wife and I decided we wanted to move
back to Upstate New York. You know we I always
say this that people I think you're gonna complain about Upstate,
and I know there's issues to issues or whatever, but
it really is an amazing place. And having lived at
different places, both my wife and I we appreciated what

(37:08):
Upstate had to offer. Our parents were still here and
the actually our moms are both still alive. My mom's
down in Binghamton and her mom's in Canton, and so
we moved up here, and you know, we moved to Saratoga,
which you know, obviously very very vibrant area, but I
think the whole Albany Capital region is a very vibrant area.

Speaker 1 (37:26):
But I just researched fee only firms and I.

Speaker 2 (37:30):
Came across a Bruchet fin Ench group and Steve and
I talked for about a year and a half and
it was a big move for Steve to bring me
on at that point. To give you an idea, right now,
we managed about one point eight billion at that point.
He was managing only one hundred and fifty million. But
that was a lot for one person to manage, and
he was very busy and he needed help. And so

(37:51):
we talked for about a year and a half and
great conversations.

Speaker 1 (37:54):
And I remember it was a more day weekend.

Speaker 2 (37:57):
That we drove up with our kids and my wife
Kathy and we had a barbecue with with Steve and
his wife Sue and John Malay, and you know that
that was it, that's sealed the deal right there. So
that was the Memorial Day weekend of twenty twelve, and
then we moved up here July fifth. We were kind

(38:18):
of nomads for the for the summer because everything was
too expensive to rent in the Saratoga region and we
were going to build a house and then we started
that in the late summer.

Speaker 1 (38:32):
Excuse me.

Speaker 2 (38:33):
So yeah, it's hard to imagine. It's been fourteen years.
And Ryan Buschet joined in September of that year. And
now you know, we have eleven advisors and we have
a team of twenty two people, and I couldn't script
a better way and a better team to work with.
So it's a great question, David. But let's just I

(38:55):
want to highlight a few things before we wrap up here.
One of which and again my colleague Vincenzo Testa talked
about on his LinkedIn post, is a mega backdoor WROTH contribution.
So these are really powerful opportunities to be able to
put monies into a wrath. And the way they work is,

(39:16):
let's say you're in a full and K plan and
you're putting in your employee ematch a contribution of twenty
four thy five hundred. Now a defined contribution plan, which
is what a full and K plan is, allows you
in total to put up the seventy two thousand dollars.
So that's your employee contribution plus an employer profit sharing

(39:36):
Safe Harbor contribution. Now, if you're the owner of that company,
you know there are ways that you can put in
that full seventy two thousand dollars. But let's say you
work for a larger company. There is no profit sharing component,
so it's just the employee piece. If the plan allows,
and that's a big caveat, that's a big asterisk. If
the plan allows, you can actually make after tax contributions

(40:00):
into the defined contribution part of the plan, so that
profit sharing piece, and then you can convert it into
a WROTH. Now again that that means, so you're going
to put in your twenty four thousand, five hundred. If
there's a catch up amount of eight thousand dollars that's
in addition. But this is from that twenty four thousand,

(40:20):
five hundred up to the seventeen thousand.

Speaker 1 (40:22):
Dollars you can make. Again, it's not a WROTH contribution.

Speaker 2 (40:26):
It's an after tax contribution into your four and K,
and then you can convert it into a wroth. But
two elements you need to check with your plan provider one,
do they allow after tax contributions? Many plans do not,
so you need to confirm that the plan allows you can.
If they don't, you can try to position in front

(40:49):
of your HR and your firm, your company that they
should allow that because they can't be done. And then
they have to allow conversions in the plan as well.

Speaker 1 (40:59):
So if you're able to do that, you think about
that you're.

Speaker 2 (41:02):
Able to put in you know, almost let's say, forty
five thousand dollars post tax after tax contributions and then
convert it that that let me say it again, you're
able to put in forty five thousand dollars after your
employee contribution. This is in addition to that, put it
into the as an after tax contribution, and then convert it. Now,

(41:26):
the other option that exists is that if they don't
allow conversions and you're over fifty nine and a half,
you can do an in service distribution. So maybe you
basically make that contribution and then you do an in
service distribution out and convert it into a WROTH as
it comes out.

Speaker 1 (41:43):
So that's another option.

Speaker 2 (41:45):
It's a little more complicated, but you know, these situations
can be very powerful to look at, so you know
it would be something I would ask you to consider
and you look at and see if that is available
through your plan. A couple other items that I just
want to highlight before we wrap up here. One of
those is for individuals that are not fifty nine and

(42:08):
a half that want to retire and take distributions from
their four one K or the iras, there's really two options.
If you're in a four one K plan. There's what's
called the rule of fifty five, which means that if
you're fifty five and older for the plan that you're
in right now, that as you retire out of that

(42:29):
plan let's say you're fifty six, if you keep your
money's in that plan, you can take distributions out. It's
called again the rule of fifty five. That allows you
to do that if you keep the money in the plan.
So something to be aware of if you want to
try to retire before age fifty nine and a half,
because if you retire before then and you just take

(42:52):
distributions out of your IRA, you're going to pay income
tax on that distribution, but you're also going to pay
a ten percent penalty. So this removes that ten percent penalty.
The other option is what's called the rule of seventy
two I'm sorry, seventy two t and what that is
is that you can take a distribution out of your

(43:13):
Ira and not pay the penalty. But what you have
to do is you have to take it for at
least five years or till you turn fifty nine and
a half. So let's say you're fifty two years old.
You want to start taking distributions from your ira. There's
a formula that exists. Actually there's three different formulas, and
it's called substantially equal payments. Is what you need to do,

(43:36):
and you have to again take it till you turn
fifty nine and a half or for five years, whichever
is longer.

Speaker 1 (43:43):
Whichever is longer, you got to do that.

Speaker 2 (43:45):
And this is another great option that we do for
our clients. What we've done in a couple cases, somebody's
had a very large Ira. They want to do this,
but they don't. When you calculate the number using the
formula from the irs, it's too much money. So what
we've done is we split the Ira into two iras,
and now the one ira continues to grow and then

(44:06):
the other ira. We've set up for this distribution, So
it works really well for individuals that want to retire early,
have moneys in an IRA and don't want to pay
that ten percent penalty.

Speaker 1 (44:20):
So something to look at it is there are some
complexities to it.

Speaker 2 (44:23):
So again I would usually recommend talking with either a
CPA or your advisor about putting in a place. But
it gives you a lot of freedom that you would
not otherwise have to be able to do that.

Speaker 1 (44:35):
Well, folks were coming on the end of the hour.

Speaker 2 (44:38):
As always, I appreciate being here with you to give
you any guidance and some insight on your financial picture.
And you know, as we wrap up here, you know,
again I just talk about appreciating and having gratitude, just
hearing Steve talk about how appreciated he is that he's
cancer free.

Speaker 1 (44:57):
Make sure you do that. You take care of yourself
and you take care of each other.