SPEAKER_01: 0:00

This is the Empowering Healthy Business Podcast, and I'm your host, Cal Wilder. Each episode, we'll dive into topics important to folks who want to run businesses that are both nicely profitable, sustainable, and scalable, and who want to achieve balance in their lives and realize their potential inside and outside of work. The show is sponsored by SmartBooks, provider of bookkeeping and accounting for businesses. Let's get started! So navigating retirement plans as a small business owner can be challenging. There are these different plans, there's 401ks, there's simple IRAs, sub RAs, solo 401ks, and defined benefit designs and all kinds of options, and there's compliance to worry about, and employees like to have these plans. And so I'm really excited to be joined by today's guest. I don't think I've done an episode on retirement plans and everything that small business owners need to know about retirement plans. Everything might be overstating it, but we're going to cover uh some of the more important topics today with our guest. Uh and so I'm really happy to welcome uh Charles Reichel to the show. Welcome, Charles.

SPEAKER_00: 1:05

Thank you, Cal. Appreciate it. Appreciate the invitation. I'm happy to be here. I'm excited to uh take part in this podcast and share some information.

SPEAKER_01: 1:14

So um, you know, I you know, I guess first of all, from your perspective, and you advise clients on this, and we can get into what more specifically you do later, but why are company retirement plans important in in the small business space, do you think?

SPEAKER_00: 1:30

A couple of reasons. I'd say the first the first main reason is when you look at it through the owner's lens, uh, it's about a tax deduction, uh, first and foremost. Um if a if a business is profitable and they're paying taxes, a a any kind of retirement plan will help the business owner reduce their tax load or their tax burden. So I'd say that's number one. Um, number two, though, is to start to build wealth through uh through the actual business itself. So owners um like to take some of those revenue streams and start to build the wealth that's needed for them to create a legacy and move on down the road, potentially sell their business or however they want to dispose of it. And then for the employees, it's a big retention tool. Um I can't tell you how many employers I've spoken to that they lose employees over the fact that uh they don't have a retirement plan and someone walked down the street for an extra dollar an hour and uh a, you know, a 401k plan that offered a match. So I'd say uh for retention purposes, it's the number two benefit uh behind healthcare benefits that uh employees look for. And I'll say maybe even number one now, because um employees can purchase healthcare insurance on their own through an exchange. Um, and so that's you know, the the need for small business owners to always offer health care is not necessarily always there. But a 401k retirement plan is is by far, I think, uh something that employees look to have when they're evaluating where they're gonna work.

SPEAKER_01: 3:02

And so you spent uh the first part of your career largely doing wholesale of retirement plans, right? So kind of how did that work? And um, what's the difference between that and what you're doing now?

SPEAKER_00: 3:16

Yeah, great question. Um, so as a wholesaler, I used to basically sell a retirement product or platform through a third party. And that third party was always a financial advisor. Financial advisor would introduce me to uh their clients and I would present our solution at the time, whoever I was representing um to that client. And had a wonderful uh sales career. Um and it really for me it just got to the point, Cal, where I am uh 58 years old and uh didn't want to have a uh goal every year that I was that my that the business said I had to achieve. So uh I had some pretty lofty goals each and every year, and I um I wanted to move away from that. So I created this company called FTG Squared, and I focus just on the 401k market itself. I'm an advisor uh to 401k plans, and I'm filling a lot of the holes that I saw as a wholesaler, um, especially when it comes to the small business market, and I define that as call it, you know, solo person up to uh 50 employees. I, you know, what I saw was a lot of gaps in service. Didn't necessarily, advisors didn't necessarily want to service that level of business. And so I've created a very easy approach, a five-step approach to helping businesses get what they want, and that's to reduce taxes, build wealth, and not spend a lot of time doing it. Right. So that's the big difference is that now I'm working directly with business owners and calling directly on those uh that would actually have the need uh for something like a retirement plan.

SPEAKER_01: 4:52

And what uh what were some of those gaps that you're now filling as a direct um consultant?

SPEAKER_00: 4:58

Well, one of the first gaps is just uh helping business owners navigate just the technicalities of these plans. Give you a quick example. You know, a lot of times I saw where business owners missed out on deductions because they didn't have a support system to allow them to get uh investments in the plan. So I will actually integrate myself with uh the business's payroll, meaning I'll work directly with their payroll provider to make sure that business owner gets their deduction in the plan for that year. Second thing I'll do is meet individually with each employee. Um, and actually, I like to say I meet the employee where they're at today. And I want to build a relationship with them. And if the plan is appropriate for them, I will help them get involved with that program and get them in at the right level and invested in the right way inside the program. That's something that's very uncommon in the business. I like to do one-on-ones. If if the employer will let me, I'll do one-on-ones either virtually like we are discussing today, or one-on-ones face-to-face. And I've had a great success in getting uh employees into plans. I have over a 90% um participation rate. And so that's that's something that you did not see or I did not see in the marketplace.

SPEAKER_01: 6:13

That isn't usual because I talked to other folks who are trying to do something similar. They're they're interested in, you know, 100-plus employee plans where they can make a lot of money. They're not talking about enjoying sitting down with the employees of a 10 employee company and helping them like you are.

SPEAKER_00: 6:29

I actually really enjoy it. Um, I why do I enjoy it? I enjoy it because I got some great advice as a young person. And um, that advice was to stick 10% in a plan. And, you know, I really this was my mentor, right? My mentor said, You're gonna do this. And I did it, right? I just trusted her and I put the money in the plan. And it really allowed me to, it set me, it set me up for my financial future by doing that. And so I want to just impart some of that good wisdom to people so that they can do the same thing. Um, it's not as hard as we all think it is. Sometimes it's people feel like it's complex. And if you have somebody there guiding you and helping you and answering your questions, you know, that's the other thing, Cal. A lot of people don't like to ask questions in a group setting, right? It's personal. It's personal to them. And they got to be able to trust you too. So doing those one-on-ones really opens the door for that uh and allows, you know, allows them to get, allows me to give what I call conflict-free advice.

SPEAKER_01: 7:31

Right. So, in terms of uh these different plan types, we kind of use 401k as the umbrella term for uh retirement plans that employees participate in. But um, so maybe we'll start with the 401k as a structure and then move on to some of the alternatives. But kind of what's the 401k plan structure and like pros and cons of the 401 structure?

SPEAKER_00: 7:54

Yeah, um, if you if you mind, I'll I'll just use an analogy uh that I've always used uh to explain these plans. I consider the 401k plan the the accord of the marketplace, uh Honda Accord. Um I own a Honda Accord and they are very reliable. They get you down the road and a lot of times they'll get to get you where you want to go. And so that's really how I view a 401k plan. It's it's all reliable. It provides a business owner the ability to next year put away$24,000 uh from their pay. It allows for different matching scenarios depending on what the business owner is looking to do from a employer contribution standpoint. And it also allows flexibility for profit sharing. And so if you add that profit sharing component to a 401k, now you're moving from an accord, you know, usually up to a BMW, right? So what I mean by that is um uh profit sharing component for a an employer and an owner will allow them to save more, in many cases, up to$70,000 to$80,000 a year inside one plan. And if that is your objective as a business owner, and also let's just say it's your accountant's objective for you, then you can step up to this BMW by you know basically just bolting on a profit sharing uh formula or profit sharing provision to the plan. If I go down, if I downshift a little bit um and talk about the uh I'll talk about the Civic, and that's a simple IRA. You know, Civic, I think, was ranked the number one sales car in last year in 2024, 2025. And so with the Civic, the Simple will allow you know$16,000 to$17,000 for a business owner to set aside. Many, in many cases, a simple is just fine for a small business. Uh, but the thing with the simple is it provides no flexibility. And so, you know, you're stuck with essentially this matching component, which is a dollar for dollar up to 3%. And it's very kind of hard and fast rules. So I see a lot of people starting out many times with the simple at the civic and then upgrading to an accord and from there maybe into the BMW with a with a profit sharing feature.

SPEAKER_01: 10:12

Yeah, I've worked with both uh simple IRA plan structures and 401ks. Um I will say the 401k, you know, it's complicated. You have an annual 15500, you have compliance testing, you know, you kind of have to know what you're really doing or have an advisor or a CFO or somebody who stays on top of all that for you. Whereas the simple, you just kind of sign up, the employees own their own accounts at the fund company, you kind of go through the motions and you've got a retirement plan that doesn't, you know, take a lot of time to manage.

SPEAKER_00: 10:45

That is correct. There there is a uh complexity to um to a 401k that is not there at uh as part of a simple plan. And so that is what you know, if if you're really looking for no fuss, no muss, uh, and deductions, high deductions aren't that important to you as a business owner, then the simple's usually a great solution. Um but the second you want to start putting more away, you kind of got to deal with that complexity. And that's kind of where I can step in and you know be a resource to people and helping them figure out what's the right design.

SPEAKER_01: 11:19

Right. Um, and then I hear about other plans, a SEPIRA and a solo 401k, for example. What are those about?

SPEAKER_00: 11:29

So I'll just give you my opinion there. So a SEPIRA and a solo K are pretty similar with one big difference. And that is that a solo K will allow an entrepreneur, a solopreneur to essentially not worry about what the compensation level is going to be and still deduct the full$24,000 into the plan. See, with the CEP, in a SEP, they are subject to a 25% income limit. And so with a with a 25% income limit, if an accountant is keeping the business owner's income at, say,$60,000 to$70,000, it really doesn't give the business owner the biggest bang for their buck. In a solo K, you can set these up very quickly, very easily, and allow that business owner, even if you're going to pay them$60,000 to$70,000, allow that business owner to deduct the full$24,000. That's the that's the flexibility. I set up very few SEP IRAs. I set up a lot of solo Ks. Okay. Um you can get a solo K now as low as, I don't know,$250 to$300 a year for cost. And so that little bit of cost adds another$10,000 in many cases to a deduction that the uh business owner is allowed to have. And so that's that's why I I typically will suggest a um a solo versus a SEP.

SPEAKER_01: 13:29

Okay. And then are there other somewhat common plan design types that we should cover?

SPEAKER_00: 13:36

The only one we haven't discussed is uh the cash balance plan. And if we go back to my um my car analogy, it would be like um I don't know, what's the highest level car you can buy these days? Uh uh Porsche, you know, something like that. And the cash balance is is for uh cash rich uh high deductible kind of companies that want a huge tax deduction. And so you pair a cash balance with a 401k and that allows uh a business owner to deduct an additional six-figure amount into a plan. Now, these are very specialized. You have you have you really have to pay attention to what you're doing, um, and they're not for everybody. But if you've you know, if you have a high tax need, you know you're gonna be able to pay uh you know a six-figure you know contribution into a plan year in and year out for the next five to six years, then a cash balance plan might be uh something that is valuable to you and something that is that is welcome. Um I will not I I I will only set up a cash balance plan with the um I'll say the blessing of the accountant. You have to involve your accountant in this decision. Um you don't want to just go it alone and you know decide, yeah, this sounds great. I can save hundreds of thousands of dollars in taxes, but you gotta have the cash to be able to do it. And so that's where I seek counsel of the client's uh accountant.

SPEAKER_01: 15:07

And then on the other side, we're talking about we've been talking about how much the business owner is allowed to contribute to these kinds of plans or have the company contribute uh some kind of a max or profit sharing contribution for the business owner. But on the other side, you know, all these great benefits to accrue to the business owner from participating in these plans, you know, if the employees are in there getting similar levels of benefits, it can be very expensive. And you have to think about, you know, if the employer wants to maximize their contribution rates, what do they need to do to avoid failing discrimination tests for the employees? Or a simple a simple LRA makes it pretty straightforward. But with once you get into these complicated structures, you know, if you want to do profit sharing or maxes, you you know, you're gonna owe it to some employees who participate, maybe even some who don't participate actively, right? So you really gotta talk work with somebody like you who knows what the business has to do for all of the employees to stay in in compliance. And because the the problems of being out of compliance can end up being pretty big.

SPEAKER_00: 16:09

Correct. So, you know, Cal, how I address that with employers is I ask a lot of questions up front. And um when it comes to designing a plan from scratch for small businesses, one of the things you want to do is help that small business owner budget what that's gonna cost, right? It's not it's a pretty easy formula because if you use, you know, the highest level of participation you can tell a business owner what they're gonna essentially owe into a plan. So I I when I set up plans these days, I set up very few non-safe harbor plans. I have them, right? I have, but the advantage of a safe harbor plan is that you bypass a lot of the complexity of a 401k plan. So most businesses these days establish a safe harbor plan out of the gate. And I make sure, as part of my due diligence with the business owner, to number one, point out how much this is going to potentially cost from a from an employer contribution strategy. And then what are the benefits that that come back to them? And one of the biggest benefits that really doesn't get a lot of press are these new tax credits that are available to small businesses. Um, you can establish a plan today and you can get back uh$1,000 in match for every employee that participates in your plan that you pay for that that is compensated at less than$100,000. So if I make say$60,000 a year at a company, and let's say I put in, you know, I don't know, 4% of that amount as an employee, that's$2,400. And if I'm matching that, I get I get a credit of$1,000 on that$2,400, right? So I put in$2,400, but at the end of the year, I'm gonna get a$1,000 credit to help me as a business owner offset um the cost of this plan. So when you show people like, okay, yeah, it's gonna cost you this much to put to put this plan in place, but here's what you're gonna receive uh come tax time, it makes it in many cases a lot more affordable. And by the way, this applies to Simples too. So, you know, if you whether you install a simple or whether you install a 401k, you still get these tax credits. And it's up to a thousand bucks per per employee that makes less than$100,000.

SPEAKER_01: 18:28

And if you um already have one of these plans, when you open up a different type of plan, you still get that that tax credit?

SPEAKER_00: 18:37

You do. So there's three tax credits. Um there's this, there's the pure startup credit, there's the automatic enrollment credit, and then there's this employer matching credit that I've been talking about. And when you, let's say you have a simple plan and you convert to, you can convert to a 401k, you will get four out of the five years of the matching credit. And so what I what I talk to employers about, if they have a simple plan, and especially if they want to sort of step it up, is for the for essentially the same cost or similar levels of cost that you're putting into the simple plan, you can now have the government help you pay uh for a portion of that four out of the five years. And so that's that's a big advantage that wasn't there for, you know, hate to date myself, but for a long time when it was trying to start a plan, it was all about cost, right? That was all it was ever about. And if you were develop if you were talking about a simpler 401k, that was it, right? And so nowadays, yes, cost is a factor, 100%, but now you have this government piece that will really help you. And it's a pure credit, it's right off the bottom line. Wow, okay.

SPEAKER_01: 19:49

So let's go through some scenarios and what types of plans generally make sense to consider in those scenarios. So let's say I'm a solopreneur, I'm a consultant, I make pretty good money. I'm not really planning to hire other W-2 employees anytime soon. Yeah. What should I really be looking at?

SPEAKER_00: 20:09

Solo K. Don't look at anything else. It's gonna save you a lot of time. Don't don't look at a SIP, look at a solo K. Find a provider that will provide a document for you at a very low cost. Um, you don't have to have a filing until you get reach$250,000 in assets. So you don't need to worry about your$5,500 for a while. Um definitely get a solo K because it's going to provide you a lot more flexibility than a SEP will.

SPEAKER_01: 20:39

Okay. And say I'm, you know, a very small business with less than five employees, you know, kind of two to five employees, not trying to conquer the world, you know, looking for slow and steady growth, never going to get big, um, nice little business, um, who wants to implement a retirement plan, what are the good plans to consider?

SPEAKER_00: 21:01

So I would say for that group, just out of the gate, you know, without having without doing any consulting, I'd say the simple IRA would be the appropriate choice, um, just to start. But if I in my investigations, if I find out that the business owner is making in excess of 150,000 or 200,000, then I might change my suggestion to a 401k because the 401k is going to allow a higher level of uh deduction. And there's a lot of fintech companies out there that have products and services that are available. Not a huge fan of them, Cal, but they are great starter plans, right? And they will get they will get you to a certain point. And then, you know, as an advisor, I'll help you navigate to something else three, four, five years down the road. Um, you know, just to name a few, you know, Vestwell is a good one, I think. Um, who else? Gusto payroll, right? Gusto slash guideline. I've set some people up on those plans. Um, easy to administer, but it's not going to be for the long term. Once we get a certain level of assets under management, you know, we'll start. I'll look at other alternatives for them. But great starter plans, low cost, easy. So simple IRA, if if it's going to just be, you know, if someone's making less than 150,000, an owner is making less than 150,000. Probably a 401k if you're making over 150,000.

SPEAKER_01: 22:32

Okay. Unless I'm a little bit bigger, I'm still not going to conquer the world, but I'm like, you know, 10, 15, 20 employees and looking to, you know, grow slow and steady there. You know, same kind of answer as the previous question, but more likely this the 401k might make sense.

SPEAKER_00: 22:49

Here's why I think the 401k makes sense. It's it's yes, it's important for the business owner, but it's also a legitimate plan. And people look at it like that, right? You know, employees say, Oh, I got a 401k. And I know it doesn't seem to make much difference simple IRA versus a 401k, but it does to some employees. They, they, you know, for lack of a better word, they understand the 401k better. Why? Because they pick up the paper. I guess people don't pick up the paper anymore. They go online and they read about 401ks, right? They don't read about simple IRAs. So it is a legitimate plan. And if you're, you know, 15 to 20 employees, you want a legitimate plan. You want something that's going to allow people to say, okay, I'm in a 401k. This company is going concerned, going to be around a long time. And I, you know, I got a legitimate benefit here.

SPEAKER_01: 23:39

Right. You can probably have, you know, a little bit more money and time to manage the the 401k if you're at that scale, hopefully.

SPEAKER_00: 23:47

100%. I've I've started a bunch and um, you know, they grow very quickly, you know, especially in this current market environment. I'm not going to say that this market environment's going to live around forever, but right now it's been, you know, it's been a very positive thing for employers and employees.

SPEAKER_01: 24:08

Cool. And let's say I've got, you know, a larger business. I've got like 50 employees and I'm looking to grow it to 100 plus and you know grow into the big market and see how big I can take this thing. I assume you're going to tell me 401k plus maybe some bells and whistles, depending on the business owner.

SPEAKER_00: 24:24

I'm just going to tell you 401k. All right. Because I mean it's just, it's just the way of the world. Okay. Um, now I will caveat that and say if it's a C Corp, right, um, then the business owner can add something called a non-qualified plan, right? And so that's definitely a consideration if the business is structured as a C Corp. Um, and if that's the case, then you can put a 401k in place and then you can put a companion non-qualified plan in place for the business owner. And it won't cost him an arm and a leg. Uh they don't non-qualified plan, they don't have to follow all the rules of a of a of a 401k.

SPEAKER_01: 25:05

Okay. So sounds like the most prominent options would be solo 401k. You're a solopreneur. Simple idea if you're a really small business and don't want the hassles and complications of a 401k. Or 401k if you're becoming 401k. Okay. Three options then. Today.

SPEAKER_00: 25:26

Today. You know, this it's always could change, but today that's that's your options.

SPEAKER_01: 25:31

Okay. Um I know one of the things we spoke about uh last week or whenever was you know the challenge in balancing low-cost plans to benefit the employees so they're not spending too much of their retirement savings on plan administration and advisor fees. Um versus access to an advisor like you who somehow needs to get paid, right? Um, in my experience, either you know you get no real advisory, but you can get into low-cost ETFs with you know 10 basis point cost ratios, and you're paying maybe$25 or$50 a year per employee, and it's also low cost, but you don't get a lot other than a plan. Um or you can get an advisor who'll offer to help you and meet with your employees, you end up paying you know between the advisor or higher cost mutual fund options, you know, you can be employees could be paying one, one and a half percent a year of their plan in um expenses to the fund company. And when the market keeps going up 10 or 20% a year, nobody really notices that. But if we get back to the markets that go down or go flat for a while, then that can really eat into the return. So a business owner who's looking out for their employees wants them to have access to ultra-low cost plans. But a business owner who wants the employees to have access to good financial advisory may not want a spring, you know, for a ton of money. So how do you how do you balance those two conflicting interests at your business?

SPEAKER_00: 27:03

That's a great, that's a great question, Cal. So coming from that background, I know, you know, as an advisor, you can charge whatever the heck you want, whatever the whatever the market will bear, quote unquote. And so one thing I did look to change in this in this business is the way fees are assessed. And so I created a very simple five-step process that if if somebody wants to engage me with, I can provide a very low cost uh approach, both to them, both to the employer and to the employee. And what I mean by that is I will charge, like I'll just use me as an example, right? The the average going rate in a retirement plan these days is 0.5% that you would pay to an advisor. Okay, that's that's the normal amount. I I don't charge that, I charge 0.25% for my plans. So I'm giving back already point, I'm giving back to the employees, right? Because that's usually taken from their accounts. And then I charge a very nominal monthly cost of 90 bucks a month to cover my expenses and to provide access to me at any given time. So everybody I work with has my phone number, has my email, my and they when they call me, I'm accessible and I'm easy, I can answer their questions very quickly and very easily. So I've made, I've create, I think I've created a new way of doing this, and uh at least different from how I worked with other advisors in the past. And so this combination of an out-of-pocket monthly costs, access to me and my process, and then 0.25% to the employees. Normally, Cal, I can get in the I can get to about one to 1.1% all in for a for an employee. And if you can get, and this is a startup plan, right? Now, so most startup plans cost two to three percent when you start adding all the stuff in there. So I'll I shop the market, make sure I provide the right, you know, the best benefit. We make a select, we make a selection together as to what's appropriate, and then I'm very transparent about what our costs are. And so, you know, outlining all of that to employers and making sure that it's affordable for them. Because that's the other thing, right? You got to be able to afford these things. It doesn't do any good to offer something in the marketplace that's appropriate for somebody, by the way, um, if they can't afford it.

SPEAKER_01: 29:31

And you don't have, you know, eight layers of uh staff and management to uh to cover either, right? Keep your cost structure lean. That's correct. Keep your cost structure lean and mean, you can pass through some of that savings to clients.

SPEAKER_00: 29:44

That's correct. I I run a very uh lean organization here. Um and it's you know, it it's it's time, there's a lot of time commitment in setting up a plan. It's typically minimum eight to 16 hours, depending on how many employees are are involved. You know, I've done I'm doing one right now. I've got a 50 employee uh school that I'm doing, and I've spent, gosh, at least three full, yeah, three full days there, right? Meeting with everybody one-on-one. So there is a there's a time component to that, but once you get things rocking and rolling and once you get the plan up and running for people, um, then it becomes hey, whenever they need me, they can call me and I can respond, make sure that everybody's doing what they're supposed to be doing, one annual meeting a year with the employer, one annual meeting a year with the employees, and then that takes care of itself. So, yes, a lot of work to get started, but as time goes on, not as much work, right? And so that's how you can balance it and be lean and mean um and still provide a high level of service.

SPEAKER_01: 30:50

So you mentioned a couple things how you work with clients. I think you mentioned a five-step process and maybe, maybe something else. Could you explain what those mean or what the approach?

SPEAKER_00: 31:01

Yeah. So I call it call your own shot process, the five-step process. And the first step is clarity, right? We get some clarity as to which way we're gonna go. What are what are the objectives? Why are we establishing this plan? Then the second step is I go away and I do my research and we come back and we collaborate and we'll select a vendor that we're gonna work with. Then third step is execution, right? Documents, data, you name it, uh, education. I get, I do all of that work for the client, right? I try to, if they give me access to their payroll, I'll do all the heavy lifting to essentially get that moving forward. And then, you know, what do people really, you know, need? They need somebody who's gonna be there and be their advocate for them. So that's step four. I provide that advocacy and then I deliver on what they want, right? And what they want is reduction in taxes, building wealth, and they don't want to spend any time on it. So that's the five-step program. I call it call your own shots. I do, I do have help. The the other thing I have done, Cal, is I do have um individual consulting arrangements where I've come in and I've diagnosed issues with plans, and the client just wants to pay me as from a consulting perspective. And I'll, you know, depending on how they want to operate, I'll either charge them an hourly fee to do that. Uh I'll charge them some points on their assets if if that's how they want to uh build, you know, pay me, um, or we'll come up with a project cost, right? And those are for I'll say ad hoc um you know solutions that people are looking for, right? And so I've done a couple of those and I'm happy to work with anybody in any capacity, right? But if you the the five-step process, the call your own shots, that's that's what I've created and developed over the last uh year.

SPEAKER_01: 32:54

Okay. Yeah, that's interesting because you know, if we already have if I'm a business owner and I already have a plan and I I don't know if I need a new plan or change plan, I don't want to sign up to switch vendors. Like I just want somebody to come in and review what I have and advise me, right? So they can get back to you. And then you can does it make sense to switch plans and get into a long-term engagement. You got it. Okay. You got it.

SPEAKER_00: 33:17

Absolutely. Yeah, people, you know, some people already have good relationships with uh their provider, they already have good relationships with the people. But what I found is a lot of times these plans are set up, I hate to say it with a paper napkin, you know, like, you know, hey, I got a the the initial call comes in and says I need to create a retirement plan, and and it just happens, but there's not necessarily any objectives behind it, any rationale behind it. And so, you know, I can come in and kind of figure out, based again on these discussions with employers, what's what's going to be the best fit. And then if they want me to be the advisor, great. If they don't, that's fine too. And I can I can serve uh the community either way.

SPEAKER_01: 33:59

So when you're reviewing plans um or business owners are thinking about, you know, um what they have now, what are some signs or symptoms that the business owner should reevaluate their retirement plan?

SPEAKER_00: 34:12

So first is benchmarking, right? So the first thing is is are your employees actually participating in the plan? Right. So what's the participation rate? What's the deferral rate? Uh are people uh what I mean by deferral rate is what's the average contribution rate by each employee? Um, what's the return of that plan, you know, globally? How does the plan and and that just Cal, that speaks to where the money's invested, right? Not necessarily if the investments are poor. It's it speaks to the education that employees have received and where they've put their money. And so return, participation rate, um, contribution rate, all of those things are very important when you're benchmarking a plan, right? Um, second thing is the actual investments themselves. Do they do they pass the fiduciary smell test, right? Here's what I tell you. Most of them do. Most investments are fine, right? There's not like you're not going to come across a lot of poor investments these days, but it's really about procedural prudence. And do you have something set up where you're reviewing this and then you're documenting it each and every year? That's that's really that's the step that a lot of people miss is the procedural prudence. So helping them establish that. Um third is actually to look at the design of the plan. How is how's the actual design look? Is the eligibility correct? Um is are the employer contributions set up in such a way to you know benefit your highest your highest valued employee, right? Um so I take a deep dive into the uh design and offer suggestions, you know, as to how things can be improved. Um cost is obviously something that everybody is interested about. So benchmarking the cost is the cost in line with the marketplace and the size of the current plan. And is there is there room for efficiency on the cost side? You know? Um and then last but not least, efficiency. Is your plan situated and efficient enough to make basically something that you can walk away from, in a sense, walk away from and not have to monitor on a daily basis? So there's been a big evolution here, uh, Cal, in regards to services that are provided. And there's some concierge services out there now. You pay for it, right? Obviously, but there's some concierge services out there now that will take all the burden off the client's shoulders. So is that something that's wanted? Is that something that's needed? Um one client I just recently helped, you know, going into it, we didn't really know what the situation was, but um plan design was a little disjointed. Um they had employees that were became eligible for the 401k and then the matching at different times, and it was creating a disconnect for the employee. So we s we solved that. The investments they didn't realize it, but the investments were very proprietary based. So they were all they were all part of a company's own set of funds. And and just in this case, they just this was a situation where they were expensive and they weren't really high performers, right? So we we made a change uh to that. And then from an education standpoint, they didn't have anybody participating. So the education piece took help take care of all of that. So sometimes it's a whole revamp like that, right? That's needed. Um, and you do it just in little pieces, bite-sized pieces, so that nobody ever feels, you know, overwhelmed, right?

SPEAKER_01: 37:58

Yeah. So kind of what I'm hearing, net net of all that is if I'm a business owner and it's been several years since I critically assessed my plan, I don't really know what I don't know, and I probably need to have it reviewed by somebody like you, even if I don't know specifically there's a problem or specifically something I can't take advantage of. If not something I've looked at closely in a few years, maybe time to take a close look this year.

SPEAKER_00: 38:23

That's that's good advice. I you know, that was a similar situation here. They put this plan in place seven years ago and they hadn't even looked at it. I mean, literally, hadn't looked at it. And I was referred into the business, and um, we had you know multiple conversations before they brought me on board. I met with the committee and the all the partners and everything. Um, but it was a big, you know, they had a lot of things that needed improvement. In fact, I said as part of the presentation, I said, look, yeah, I my goal is to keep you right where you are, right, right where you're at today. I don't want to change your current situation. I just want to come in, I want to improve these areas. That's that's what you're hiring me to do. But when I got into it, like I couldn't not show them where they could go with their plan and save over 50% of what they were paying. So, you know, I I actually came to them and I said, guys, I know I told you we were gonna just leave this as is. And we can, but I just the here's these other three options that are available to you. And you know, if I'm in your shoes, I would do it because the savings and and the quality so much better, right? And so they we just we actually just completed the um the process um a couple weeks ago, right? So we're all we're all set and and done. But that's a perfect case of not knowing what you don't know, right? And and not having any, not not looking at it, not having anybody reviewing it with you.

SPEAKER_01: 39:57

So what are your goals for your own business, FTG Squared?

SPEAKER_00: 40:02

Great question. My goal is to you know grow at a clip of about 10. I want to acquire anywhere from 10 to 20 clients every year. Um, ultimately, I want to have about 100 clients that I'm helping, that I'm serving over time. And then my other thing is uh what's I think another unique aspect is I give back to the community. So FTG Squared stands for for the greater good. And the idea there is you're doing good for yourself. Yourself if you invest in a retirement plan, but I take it a little step further, and then I I give a portion, I give 5% of my revenue to a not-for-profit that assists with built rebuilding neighborhoods here in our beautiful city of Baltimore, Maryland. And so I have an impact ticker in my in my that I keep track of. And ultimately I want to impact about a thousand lives, a thousand employees over time. And I might actually increase that to 2,000 because this year alone, I've already impacted 83 people. And that may not seem like a lot, but if you can get somebody to invest in a plan at a young age, right? So that's one of my things. Never invested in a plan. They're going to do it for the first time. That's an impact. And then the second impact I track is okay, you're only putting in 1% of your pay or 2% of your pay it and you need to do 5, 6%, right? Helping an employee increase that amount to a more sustainable level, that's also an impact. So this year alone, and I'm not done with the year yet, it's 80, 83 people, right? So that's big, right? That's that's 83 people's lives that are potentially changed for the better. Because again, if you set these plans up and you start to contribute, and I'm there to help them every year to say, all right, here's what we're doing, here's what you've done. How do you feel about this? Oh, can you do one percent more next year? And let's say they can afford it, it just puts them on a path where they'll they'll start to build wealth, right? And last time I checked, the only way to build wealth in this country country is to be in a plan. I mean, yes, you can get an inheritance from somebody, maybe that's out there for you. Um, yes, you might be somebody who can develop a product that wants to be sold to millions of people, and you can and you can that could be something that you do. Or third, you win the lottery, right? All of those things are hard to do, like super hard. But this is easy, just getting in a plan. And so that's how you build wealth in America is one little contribution at a time. Um, and I like to, I want to be there to help them do it.

SPEAKER_01: 42:50

Right. And it is, uh, I think it's important uh to like what you're doing, educating employees on the contribution rates that they need in order to accumulate the kind of money for retirement they'd like to have. Because when we do the math, like contributing the minimum to get your uh employer max, you know, contributing three or four percent a year and getting a three percent max isn't gonna get you a big retirement nest egg, right? And you gotta start young so you get the benefits of compounding over the decades. I mean, you can do catch-up contributions in your 50s, I guess, but you know, it's a lot better to put that money in in your 20s and your 30s.

SPEAKER_00: 43:31

100%. I mean, 100%. And the sooner, you know, I show people a very modest future value calculation, I use a 7% return, right? So nothing, nothing extravagant. And even show them starting out today and not even increasing that amount, right? So, all right, we're gonna put this amount today in, you know. And depending on your age, again, and depending on how long you have to retirement, that time in the market is a huge, huge factor. And so people are blown away when they see the numbers, right? Um, and it's all sustainable, it's all something that can happen. It's just you gotta you gotta take that leap, you gotta do it. And um, I love helping people do that. I love helping people get to get to that point.

SPEAKER_01: 44:17

It'll be interesting to see whether these new uh thousand dollar Trump accounts impact young people's savings, um, because they could turn, you know, 18 or 20 years old and have the benefit of you know 18 to 20 years of compounding the initial investment and realize, wow, if I just keep contributing money in my 20s, I'm gonna end up with a lot of money when I'm at retirement age. We'll see. Yep. We'll see. We'll see. Absolutely, yeah.

SPEAKER_00: 44:42

More to come, right? For sure.

SPEAKER_01: 44:43

Like and then you get like Michael, Michael, uh, Dell and his wife contributing like six billion dollars or something to help fund similar type accounts. So it's interesting. We're getting young people into the investment game a couple decades earlier than they otherwise would be.

SPEAKER_00: 44:58

Yeah, a hundred percent. I mean, and I'm all for innovation in the marketplace. I mean, we've been dealing with the 401k simples for a long, long time, right? It's basically been that's what we have, right? If somebody can come up with a better mousetrap, I'm all for it, you know? And so I'd love to see innovation in this, in this marketplace. Because right now, it's really just about getting in the plan and getting started and and being in a diversified portfolio. But if there's something better out there, I'd love to see it. I'd love to see somebody come up with it.

SPEAKER_01: 45:31

Yeah, yeah. Uh, are there any other topics that uh small business owners really need to know about retirement plans that we haven't talked about yet?

SPEAKER_00: 45:42

Um, not not necessarily, Cal. I think I think we've covered a really like a large swath of those today. Um I just would say that the one thing to be aware of is just employee overall general wellness, right? And um, one of the trends that I see, and one of the one of my follow-up items as I get to know employees is to talk about home ownership. And home ownership is the second, call it the second tier to building wealth in America. And home ownership is is hard. That's not an easy thing, right? It's easy to push a button and say, I want to be in a 401k, but it's hard to own a home and the expectations around owning a home. And so what we see, what I've seen recently is a lot of incentive programs to help people get into homes. And so that's one thing I uh business owners, if I was aware of, I would, you know, try to help your employees, if they can afford it, to link up with realtors that really know and understand the local laws of your of your area and understand that there's now these big benefits in many cases for employees that want to take a you know a six-week course on owning a home and what that what that entails. Because the sooner they get into a home and start to build equity, it's just like the 401k, right? And over time, the more and more equity you build up, the more and the more you're building wealth, the more you're creating it from scratch. And so that's usually the second step in my process is with employees, is to, as I get to know them better, I'll ask about home ownership. If they're happy running and they're all good, no problem. Keep doing it. But though there are a lot of people out there that um want to be in a home, but they just don't know how to get there. And so link, I link them up, I can link them up with various um real estate uh personnel that really know and understand the market. I'd say that's the next, the next thing that's really needed in this, well, in this country is to help people get into homes again, right? We have a lot of you and I, I don't know I don't want to date you too much, but we we had the we had the ability to get into those homes at at younger, you know, younger ages, and they were relatively affordable, right? Nowadays, different story. And it's a lot harder for people to, you know, get into a home. And so that that would be the thing I'd suggest is like looking beyond just this retirement plan and helping your employees get into homes. Yeah. Big, big difference. Yeah.

SPEAKER_01: 48:24

It's interesting on that topic. Uh, there's a lot in the news about how the home ownership rate is relatively low now compared to decades ago. Um, and some people say, well, that's just because inflation's been too high, real estate prices are just too high, um, employee wages haven't kept up, but things like that. But the other side of it is the average size of homes built in the last couple decades is like almost twice as big as the average home that was built in the you know 30s, 40s, and 50s. So there's a reason, there's another reason homes are so expensive, not just inflation and low interest rates. Um, so it's it's it's an interesting topic to try to unpeel a little bit.

SPEAKER_00: 49:04

Well, it's like I think it's like resizing people's expectations, right? And when I first started, I I was in a very small uh condo when I first uh started home ownership. I was maybe 700, 800 square feet. It was two bedrooms. You know, uh my cousin and I lived in a very small place. Um, we actually got it as a foreclosure, right? So um resizing expectations to start small, but then you know, I call it springboarding, right? You know, you you get in something, you start to build some equity, you get maybe when you sell it, you get a little bump there, you move into something that's maybe a little bit bigger, but also not maybe not as big as you want. And then again, you start to build equity in that. And um, you know, that those two things, building, you know, being in a home and and being in a retirement plan, those two things set people up for financial freedom, right? For the ability to call your own shots. And um I would start with home ownership first, but it's so dang hard to get anybody into a home. And I don't know enough about it to actually help them do it, except connect with the right people, right? Um, so 401k first, but then after that, try to get in a home, you know, if you can. Try to try to own your own home. Start small and build on that.

SPEAKER_01: 50:27

Good advice, Charles. I really appreciate you taking the time the last uh 45-50 minutes to explain all this stuff. Hopefully, listeners have learned something. We've got a refresher on things they may have learned about a decade ago and hadn't thought about much since. So I really appreciate your time. Um, wish you the best of luck with FTG Squared and growing that and achieving your goals. And if folks want to get in touch with you, what's the best way for them to get in touch with you?

SPEAKER_00: 50:51

Best way is just to give me a call. Um, I don't know, do I put it in the chat here or something?

SPEAKER_01: 50:56

Tell me what it is, and I'll get it into the show notes and it'll be in the transcript.

SPEAKER_00: 50:59

Yeah, it's it's 301-466-9945. Um if you call me, I'll call you back. That's that's my promise. All right. I know a lot of people don't always call you back. I do call people back. In fact, I made it one of the reasons I had such a good career is um I would somebody would call me from some random number. I didn't even know who it was. I'd call them back. Half the time it'd be somebody looking to that e they needed help, right? So I I'm I will call you back if you give me a call. And um happy to do so.

SPEAKER_01: 51:35

Well, awesome. Thanks again, Charles, for your time today. I appreciate it. Thank you, Kev. This has been another exciting episode of the Empowering Healthy Business Podcast. Until next time, signing off. Thank you. Another episode in the books. Thank you so much for tuning in. For show notes and more, visit empoweringhealthy business.com. If you would like to have a one on one discussion with me, or possibly engage smartbooks to help with your business, you can reach me at Camel C A L and EmpoweringHealthybusiness.com, or message me on LinkedIn where I am easy to find. Until next time, this is Empowering Healthy Business, the podcast for business owners, signing off.