EP 57- Preserving and Growing your Wealth with Tammy Trenta

August 2, 2022

Tammy Trenta is the founder and CEO of Family Financial, a woman-owned wealth management firm that provides financial support to entrepreneurs. Tammy has 26 years of industry experience as a certified exit planner and certified tax coach which helps her clients to devise tax strategies, navigate the sale of their businesses and reach their financial goals.

In this episode, Tammy talks about how you can increase your wealth as a business owner and the financial aspects you need in place in order to preserve your current wealth and keep more of what you earn. 

In this episode, Tammy also discusses: 

  • How you can prepare to work with a financial advisor 4:49
  • Why you should work with a fiduciary and how to find one 5:06
  • Why business owners should be working with a financial advisor 9:34
  • Mindset shifts entrepreneurs can make in their business to have better finances 13:25
  • Creating a retirement plan and exit planning and preparing financially 15:38
  • ESOP-what it is and the pros and cons 25:30
  • Strategies to help create wealth in your business 27:00

Connect with Tammy: 

Website |  https://familyfinancial.biz/

LinkedIn | https://www.linkedin.com/company/family-financial/

Connect with Danielle:

Website | https://www.kickstartaccountinginc.net/

Facebook | https://www.facebook.com/kickstartaccountinginc/

Instagram | https://www.instagram.com/kickstartaccounting 

Twitter | https://twitter.com/KickstartAcct

Things Mentioned in Today’s Episode: 

Book your FREE strategy call https://www.kickstartaccountinginc.com/get-started

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Full Episode Transcript

Intro  0:00  

Welcome to entrepreneur money stories, the podcast for women entrepreneurs who want to dig into their money stories so they can break free from limiting beliefs around money once and for all. Hosted by Daniel Hayden, owner of kickstart accounting, Inc. This podcast is a series of real conversations about money mindset with valuable and action packed takeaways for the entrepreneur who's building their abundant empire. Danielle is a reformed corporate CFO who's on a mission to help rural breaking female entrepreneurs understand their numbers and gain the confidence to create sustainable profits. And now here's your host, Danielle Hayden.

Danielle  0:41  

Welcome back to another episode of entrepreneur money stories. I'm so excited to welcome Tammy today. She is the founder and CEO of family financial Tammy empowers families and business owners to keep more of what they earn, preserving and growing their wealth. She takes a holistic 360 approach to wealth and financial management integrating all the financial the tax legal guidance, which helps her deliver the optimal outcomes and achieve her client's financial goals while saving them time and money. Sounds like a dream. In addition to relentlessly advocating for our clients, she is a strong proponent for mandating financial literacy curriculum in high school and colleges across America. Amen to that I cannot support that initiative enough. Her 26 years of industry experience as a certified exit planner and the certified tax coach prove instrumental and help clients to devise tax strategies, as well as navigate the sale of their business. Prior to launching family financial Tammy spent the last seven years as an advisor to a fluid family utilizing a family office approach. During that time, she discovered that there was a lack of collaboration between professional advisors and the client, which often resulted in missed opportunities. Tammy is married and lives with her husband Ryan and son Jack in Manhattan. Tammy is an avid runner, and also enjoys skiing, practicing yoga and cooking. And then big Sunday dinners with friends and family. I am so excited to welcome Tammy to the show. So here is our conversation, Tammy and I. Tammy Welcome to entrepreneur money stories.

Tammy  2:12  

Thanks, Danielle. Happy to be here.

Danielle  2:15  

So I'm so excited for the audience to hear your wealth of knowledge and fill them up with all the tons of action steps that they can go and take in their business right now. But let's start with a little bit about yourself and some of the strategies that you use for your business to keep your money mindset strong.

Tammy  2:34  

That's a great question. Well, I think that the first thing that I do is determine how much I'm going to save each year, and I back into everything else as long as it fits. Now, it doesn't always work that way. But that's the goal. Because at the beginning of every year, I make my own plan, I figure out what I'm going to save, and then I go back to how I'm going to do that.

Danielle  2:59  

Awesome. So do you treat your own finances, the way that you treat your clients? I think that's been interesting to uncover how other financial advisors are handling that.

Tammy  3:12  

I love that question. And if I'm being honest, I am pretty confident that the advice that I deliver for my clients is probably better than what I do for myself. And it's just a matter of time and devotion. My things I already know what is in my head. A lot of it's on autopilot. So I have the time to focus on the client.

Danielle  3:37  

Yeah, perfect. Well tell me a little bit about your business and how you do work with your clients.

Tammy  3:41  

Well, we start every relationship with a financial plan. And you know, I always say the financial plan helps us identify where you are today and what your goals are and where you want to be in the future. And you know, there's a lot of goals that people have: some people want to send their kids to college, some people want to retire at 50 years old. And, and so you know, we take all of those goals and try to come up with a strategy to help them, you know, I think the biggest value add for my firm is to help clients keep more of what they earn. And a lot of that is through just tax planning and little tiny adjustments that make a big difference. So we do that every year. And if you work in knowing that you work with business owners, Daniel, you can appreciate that having a business and then the business is the means to your personal life. It's not like you're going to work and getting a W two wage and going home you almost never shut off and they're they're very much intertwined, the business owner relationship and an integrated level because one drives the other.

Danielle  4:49  

It sure does. I think every single one of our audiences can attest to that. Absolutely. For somebody who's listening who has never worked with a tax planning coach or a fan Financial Advisor, what are some ways that somebody can prepare to start to work with somebody like that?

Tammy  5:06  

Good question, I would say the number one rule, and you should not waver in this is to find a fiduciary. And so many people are not familiar with that term. You know, in our industry, everyone is very familiar with that term. But a fiduciary is an advisor that has a legal obligation to put your interests ahead of their own. So it eliminates any type of transaction where I'm trying to sell something to you and I get a commission. And there's two things that are similar. And I'm going to pick the one that puts more money in my pocket. It keeps us aligned with the client's goals. A very small percentage of the financial services industries are in fact actual fiduciaries. There's a lot of ways to determine if you're looking for an advisor, if they're a fiduciary.

Danielle  5:58  

What are some of those ways that somebody can do that search? Well,

Tammy  6:01  

There is a website called broker check.com. And broker check, you can type in the name of the advisor, and you can, there will be two letters there's a B, which means they're a broker. And there's Ay ay ay ay, if they are an investment advisor. So you want to see someone that's only Ay ay ay, with no, B.

Danielle  6:25  

Okay, that's really helpful. Now, is there anything that we need to do to plan our business? I hear all the time when clients are thinking about becoming a client of kickstart accounting, that they'll say to me, hold on, I have to get organized and need to put everything together, and it really delays them getting the support that they need, right this minute, right. And it's not top priority to get your finances in order but you know, there's so many parts of running a business. And so that tends to take a backburner. So is there something that we need to do to air quote, get organized, in order to be able to make this a successful relationship? Well, that's

Tammy  7:03  

part of what we do is help people to get organized and for that, that they're organized. And so we do it for selfish reasons, because we need to be organized to be able to help advise them, but the side effect is they get organized. So it's nice.

Danielle  7:20  

So don't spend the time getting organized before you make the call, make the call and work with work with you or another individual to get organized. 

Tammy  7:32  

I think you want an advisor who gets you, if your advisor doesn't work a lot with business owners, you're missing out, because it's a very different practice. And, you know, I will say that the level of organization, you know, our processes, I'll meet with someone, talk to them, see what they're looking for, see if they're fit for us. And if they are, I will send them a checklist of items to pull together and I'll say, Listen, pull together what you can, don't worry about it, if it's something hard to find, like, we'll figure it out. And that kind of takes the pressure off of them have to be perfect and completely prepared. Because some things aren't, you know, as critical. And we can always talk through that through the planning process. I like to do the planning alongside the client. So, you know, we'll maybe look at okay, here are your cash accounts. Does this look right? Does this look right? Does this look right? Anything we need to add to anything we missed, and so it gets them thinking, and it definitely takes the pressure off of them having to feel like they're perfect. They have everything pulled together?

Danielle  8:42  

Two questions are loaded. And in your comment there, you made the comment that if you're not working with a financial advisor, who specifically works with business owners that you miss out on that up mean, you missed out on a opportunity, what's different about because I hear a lot from our clients, I became an accidental entrepreneur, right. So I was working for somebody else. And either I had the side business, I had this idea, right and, and so I maybe had a financial advisor that I was working with as an employee, and now I'm suddenly a business owner, and possibly doing really well. But I'm still working with that same advanced financial advisor. So what pieces are, am I missing by not changing that relationship? Because this could be a big change for people. Right? I hear it all the time in terms of bookkeeping and CPA services. So what what are they missing out on and what could be the opportunity, the

Tammy  9:34  

coordination and collaboration? Most financial advisors are only managing money. And maybe once a year when their 1099 is out, they'll email it to the CPA and there's really little to no communication there. And that communication is critical. If you go to a financial planner who's looked at Everything, and you ask them a question, you're gonna get one answer. If you go to your CPA who only sees your income statements, they don't see your net worth, you're gonna get a different answer. And if you go to a lawyer, you're likely to get a different answer. And the missing component is context. So if you don't see your financial advisor, as this quarterback of all of these other people, then you're definitely missing financial opportunities.

Danielle  10:30  

And then you mentioned that there's an approval process, people apply to work with you. What would make somebody not a good candidate to work with you, or make you a good candidate, maybe make me spend that positively?

Tammy  10:43  

Well, oftentimes, I will be referred to by one of my clients. And, you know, they're, like you said, entrepreneurs, growth oriented entrepreneurs, oftentimes, they are very busy running their business, they've also perhaps had to hire people. And so they appreciate the value, if they can't do it themselves, you're going to outsource it, right. And so hiring an advisor take something off of their plate, as long as it's a relationship that they feel like their advisor is going to be able to do equal or better of a job than they would have done on their own. And I feel with us, that's often the case, it's just a knowledge and skill set and time that this is all we do. So when you get someone like that, it's it's very easy. If they, if they come to us, and maybe they haven't saved any money yet. Okay? That is harder to work with them. Because the way that we're compensated is by managing investments. And so, you know, I'm willing to take somebody who's just starting out that maybe has some money that's accumulated so far. But if they're a business owner, that's living paycheck to paycheck and running all of their personal expenses through the business, and there's no money left for anything, we're not going to be able to be that much help for them. They have to change what they're doing. And they may not want to, just depends.

Danielle  12:20  

Yeah, I think that's a good point. It's very common in the entrepreneurship world. And I think the takeaway there is for anybody listening who is commingling business, and personal, and our regular listeners are like, yeah, you have to now you say it all the time. You have to break up your business and your personal, they have to be 100% separate, you need to be moving those funds from your business account to your personal checking account. And really understand your numbers and what your business is doing and what your business performance is, versus your personal and your personal performance. Right. They have to be separate and be seen as two different things. That way you don't know if your business is profitable or not, if you're running all of your personal transactions through and I know that can be difficult for people, but it's really important to create that separation.

Tammy  13:05  

Yeah, I think that the idea, perhaps in their mind is whatever they can deduct, they don't have to pay tax on. But if you don't have a clear picture of what your finances look like, and you don't have the ability to save, that is something that will catch up with you eventually.

Danielle  13:25  

I don't agree more, what are some of the most common tax saving strategies that you see that might be a simple win, or simple thought change or mindset change that somebody can implement in their business right now?

Tammy  13:40  

Well, over the last few years, there's been a couple of little loopholes that have been fun to take advantage of, you know, through the Cares Act. One was paying your taxes through your corporation. And I don't know if this applies to every state. But oftentimes, if you're an S corporation, you don't pay your taxes through your corporation, you pay them personally, because it's a pass through. But last year, and this year, they're actually allowing you to get the deduction, the federal tax deduction on the state income tax that you pay, so it's beneficial to pay it from the business. Another strategy is with qualified business income deduction. So that's kind of an accounting term, but you can determine how to optimize your Q bi deduction. And so that's kind of a fun little trick. And then I would say the third thing is just looking. If you are a business owner who feels like you pay a lot of money in taxes, I would look at trying to design a retirement plan that maximizes the deduction. And so those are maybe three basic things that could be done.

Danielle  14:54  

And do you help business owners put together a retirement plan that they can implement in their business? Yes, I agree. So when you start to work with a client and implement some of these check strategies, what does that look like for somebody who, you know, I hear a lot that, you know, my tax return feels very transactional. I wish I had somebody to put forth more ideas. What is the relationship look like as they are coming on board? And you're looking at the numbers, just just walk somebody through what that relationship and what that experience looks like?

Tammy  15:27  

Well, if you look at statistics, there are about 1.4 million tax preparers in the US.

Danielle  15:35  

I didn't know that. That's a lot.

Tammy  15:38  

Yeah, I think there's like 71 clients for each tax preparer or some strange statistic like that. And there are about 1000 tax planners. So a common complaint, when I'm talking to clients, is that, you know, my accountant doesn't try to find deductions, they're not helping me look forward, they just kind of want to prepare my return and move on. And the reason for that is in the tax preparation world, it has definitely become commoditized, you have TurboTax, you have come to, you know, places like h&r block. And even if you have a tax preparer, oftentimes for them, they're trading money for time. And so if they're getting, you know, 250, or $500, on a tax return, they don't have the time to spend looking at all of the other things. And, you know, one of my good friends is a CPA, and he has 400 clients, there is no way that you can spend that type of time, it's like I have a deadline, I have to get this done, doesn't make them bad people, it doesn't make them incompetent, it's just an expectation that, for whatever reason, clients have, I have had it in my past, that is just not realistic. And if you do want tax planning, oftentimes you have to, you know, pay an hourly rate for that additional service. So what I do is, I will collaborate with the tax preparer. I have CPAs that refer to me, because they don't have time to do it. I'll do it for them. You know, if someone doesn't have any savings that we charge for tax planning, if they do have savings, and you know, we're able to manage a certain amount of their investments, then we'll just do it as part of the service. Awesome.

Danielle  17:41  

I think that's a really good point. I just, I think that we, as business owners differ, well, I hear a lot of business owners defer to their tax accountant as almost everything right? Somehow this individual has become a business strategist, a consultant that QBO, expert tax preparer tax planning, and their training was literally only in how to prepare the tax return. Maybe they have some tax planning, but to your point, they don't have time for it. And it's the same thing that we hear from the business strategy side at kickstart, is that business owners are going to their CPA and asking for this business guidance. And we have this expectation that is almost I'm gonna use the word unfair because they weren't trained on how to run a business, they were trained on how to prepare a tax return. And they are having the same struggles as every other business owner because they're running their own tax practice. So I think just a reminder to anyone listening, how we need to stop looking at this one individual to serve all buckets and instead put together the whole money team that we need in order to serve our business.

Tammy  18:50  

And I will add that with COVID. And all of the legislation that has come out it is been an absolute nightmare for accountants to get things files and get them done on time. So it's been a very thankless job. So you know, I do sympathize with them. It would not be a position I would want to be in.

Danielle  19:12  

Absolutely. Well, I know one of your other longtime experiences is in Exit Planning. So I talk to clients all the time that are thinking or trying to be forward thinking about possibly selling their business in the future, or at least being able to be open to that possibility. So for somebody who's thinking, I'm either open to the possibility or I'd really like to put this in my five year plan. What are some strategies a business owner can take today to make sure that they're primed and ready for that event? Both financially, you know, and strategies in their business so that they're prepared all the way around.

Tammy  19:50  

So if you are thinking that you want to exit at some point, fine. Having five years is actually not too not too soon to start planning. If you have an interested buyer, they're going to want to go through the due diligence process. And depending on the size of your company, they might have to hire an outside accounting firm to do due diligence on all your financials going back three years. So if you don't have your finances in order and organized, it's going to cost a lot of money to have that done. So having clean financials is probably the most important thing. And then having a goal looking mean, you can get an idea of what your business is worth, we can help with that by giving people an idea of what their business is worth, you can always check with like a certified business valuation expert. It's never an exact science, because it's always what someone is willing to pay. And everybody's business is a little bit different. The size of the business matters. But you know, I recently had a client who was interested in selling his solar business. And he's 20 years old. He's a young, and wonderful guy. But he was offered a multiple, and he had no idea what that multiple meant. But I mean, it was in the seven figures. And so it sounded great. And so I said, Okay, well, let's explore this. And I brought in a transaction attorney, and I brought in an investment banker, and we determined that the multiple he was being offered was very low. And so you know, they had already been through the due diligence process, and he ended up walking away. And it was such a great learning experience. In any case, and I think it really emphasized for him the importance of having clean financials.

Danielle  21:52  

Yeah, absolutely. I hear that story way too often. It's just not understanding what to expect, and the number feels big. But is it really the value that your business is actually worth? Is there anything that we should do to prepare financially, personally? Now, I've watched a few clients over the years who have sold their business, but wasn't they weren't ready for what happened next, right. So their business was supplying a regular financial income for them and their family. And although the sum of money felt large at the time, it wasn't enough to actually live on for, you know, for the rest of their lives. Right. So how do you prepare financially for that event? And I don't know if you could speak to this, but maybe even emotionally, right, so many of our businesses, our babies and our identity. So are there any other strategies that you've seen use to help prepare in that way?

Tammy  22:50  

Well, and I'm sorry, I overlooked this because it's extremely important, but we would factor it into the financial plan. So we would show the lump sum of money coming in, we would adjust it for taxes. And there are tax strategies when you make these transitions. So those are something else that you want to look at. And then we see how long the money lasts. So part of it is what do I need? But you are absolutely right, there is a psychological component to this. So I recently had a client in their 40s sell their business, and they don't know what to do with themselves. So turning that faucet of income off is very scary for many people. And it's not scary for me, because I'm an advisor, I know how much their income can spin off. But when you turn off the income faucet and start to take money from your nest egg, that is a tough adjustment for most people.

Danielle  23:55  

Yeah, any way that we can prepare for that. Just anything that you've seen your clients do over the years to start to think or start to prepare for that.

Tammy  24:04  

I wish they prepared more, but oftentimes,

Danielle  24:08  

That's why I'm asking. You know, I'm just I've watched too many people walk into it. Yes, this is a lot of money. I'm ready for this. And then they get like, Yeah, a few months later, you're like, Yeah, but now what,

Tammy  24:23  

but I think when you avail yourself of the advisory team, you need a team, you really need a team. If you are preparing, you might need a CFO, you might need I mean, there are things that you have to get your HR all tied up. And I think there is a different strategy if it is a third party transaction or an internal transaction. You know, I have a client doing an ESOP right now. And

Danielle  24:56  

so the strata one who doesn't know what that means, what a What is that?

Tammy  25:01  

So an ESOP is an employee stock ownership program, it is a qualified plan governed by ERISA, which means it's kind of like a retirement plan. But you can utilize it to transition a business to the employees of the company,

Danielle  25:20  

what would be the reason to do something like that?

Tammy  25:23  

Well, rest, if you are structured properly, or could be structured properly, within a five year period, you can sell the company into the ESOP, for your company stock. And you can exchange that company stock into a diversified investment portfolio. So it's a way to avoid the capital gains tax on the sale of your business.

Danielle  25:56  

Any down is false.

Tammy  25:57  

It's expensive. So

Danielle  26:00  

yeah, it's very expensive.

Tammy  26:02  

Usually, I mean, the one that my client is doing, they're a pretty high revenue business, but I think it's costing them about $400,000. For the east. So yeah. Yeah, I think there are people where that's a candidate, you know, where that's an option. But if you can't let the tax tail wag the dog, you've got to look at, well, what is going to optimize the most money in my pocket? And that's how we look at it. I really

Danielle  26:32  

like that saying, because too many business owners are making decisions just on taxes. And I hear people say all the time, well, it's deductible. Oh, don't spend $1 to save 40 cents, right? It's not dollar and dollar out. So I think that you make business decisions for your business that are right for your business that are not for tax, let's round this out with some strategies on wealth building. So as business owners, there's so many reasons to go into business for yourself. But I think one of them is to create wealth for you, your family, and even your employees. So what are some strategies that a business owner can do right now to either start to think about wealth, or actually put strategies in place to help them create wealth.

Tammy  27:21  

So I have a, I have a pyramid that I use, and you know, you'd be surprised. But at the very bottom of the pyramid, you have spenders and those people live paycheck to paycheck, they don't really have any money to save. And it's very hard without figuring out a way to earn more income to get to the next level, which is the saver level, saver level, people save but they really don't know, they don't have a goal in mind, or just their parents taught them to save and they're just, you know, they do their 401k Every month, they don't even know if it's enough, then you graduate to investor level. But before we get there, 99% of our country is in the spender saver population, which is staggering statistics. So at the investor level, you start, you're like you're creating wealth, you're saving, you have a plan, you have a goal, you have probably a CPA and an estate planning attorney and financial adviser, and you're managing all of those moving parts. And at the highest level as wealth creators, most business owners that are successful, are in that category where they don't have the time to manage all these moving parts, but they hire somebody who can do all of those things for them. So if you are, I will say this, no matter where you are, you know, you can kind of identify where you think you are in that pyramid. But time is of the essence. So the longer you wait, the more that you have to double what you're saving to hit a goal in the future. And so you are as closest as you are ever going to be to try to jump to the higher level of the pyramid. And you just have to figure out a way to do it now. Because things accelerate over time. And it's either going to accelerate down, or it's going to accelerate maybe below what your goals were. So having goals and figuring out how to get there is you know, probably half of the battle.

Danielle  29:26  

Yes, I love that. Thank you for any last strategies that you can leave the audience with that maybe you use in your business or to keep your mindset strong, or that you use with your clients, any last action steps that somebody can take?

Tammy  29:39  

Well, gosh, the way that we run things is we meet with our business owners quarterly, you know, which is different than personal planning clients because they don't really need that but reviewing the financials with your advisor and your CPA, and your bookkeeper and hopefully your bookkeepers running payroll, but the more that you can cut Solid date those skill sets, the better off you're going to be, the fewer mistakes you're going to make or that someone will make and just to give incompetence in one person to be the point person to handle all of that. And oftentimes, that's the either the financial advisor or the business owner, just depending on, you know where they are

Danielle  30:19  

awesome. Is there anything that you wish I would have asked you today?

Tammy  30:23  

I can't think of anything off the top of my head.

Danielle  30:25  

Awesome, perfect. Well, where can the audience stay connected with you and learn more about what you and your team do?

Tammy  30:31  

Well, so we have a website. It's family financial dot biz bi Z. And I can also be found on LinkedIn. I mean, I'm everywhere but LinkedIn I am pretty engaged with and that is Tammy trenta.

Danielle  30:47  

Awesome. Well, thank you so much, Jamie, for being here. I really appreciate it.

Tammy  30:51  

Thanks, Danielle. Have a wonderful day.

Danielle  30:53  

Tammy was an absolute wealth of knowledge. I hope that you are able to take away so many action tips. I know that it can be really overwhelming when you listen to an episode like this. So I want you to reflect back and think about one thing that you heard today that you could implement in your business. So take the overwhelm out of this, implement one thing you can flag this episode and come back. If you need any support. In implementing any of these strategies, you want to kick start counting inc.com and book a call with the kickstart accounting team to talk about this further. We're happy to support you can also shoot us an email at support at Kickstarter counting inc.com If you like today's episode, all we ask is that you like and subscribe, even take a few moments of your day and leave a review. We are doing this podcast as a passion project. This is something that I've been wanting to do for a long time to bring these amazing guests to your ears. And this is how the algorithm will help other individuals continue to find this podcast. So again, please go like subscribe and leave a review and if you need anything in the meantime, don't forget to kick started counting inc.com Until next week,

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