Business Innovators Radio - Interview with Jay Forgione Owner of Summit Retirement Solutions Discussing Retirement Planners vs Traditional Wealth Management Firms

Episode Date: September 18, 2024

Founded in 2009, Summit Retirement Solutions is made up of qualified financial professionals who are passionate about helping individuals and families achieve their ideal retirements. Jay is committed to helping clients work toward their retirement dreams by crafting customized, easy-to-understand financial strategies. Beginning as a Senior Regional Manager for a major corporation, Jay decided to follow his passion for helping others and opened Summit Retirement Solutions. As the leader of his firm, he works each day to ensure his clients receive the guidance, support, and resources they need to retire with confidence and joy. That includes protecting nest eggs with tax-efficient strategies. Jay has a Bachelor’s Degree in Business Management from the University of Connecticut. Jay enjoys being outdoors, skiing, hiking, golfing, and spending time with his wife and three kidsLearn More: https://summit-rs.com/Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-jay-forgione-owner-of-summit-retirement-solutions-discussing-retirement-planners-vs-traditional-wealth-management-firms

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with this Jay Forgeone, who's the owner of Summit Retirement Solutions. Jay, welcome to the program. Hi, Mike, how you doing? Hey, doing really good. I'm excited to talk to you and learn how you serve your clients. But before we

dive into what sets you apart from traditional wealth management firms, give us a little bit of your story and background. And how did you get started into the financial services industry? So I got into the financial services industry actually kind of by accident. I've always been interested into it in that arena in my life. But, um, went through a career change in 2008 when the world was imploding. I remember that? I found an area I could really help people. And I got into it.

Like I said, I was recently released from a position that I wasn't expecting. And I had another buddy who was in the business who kind of brought me in. And we started working together doing some financial planning. And as I kept going, the area that I found where most people fell short or needed the most help was in retirement planning. There's just a lot of facets and a lot of different parts that go together to, you know, other than just like wealth management. So I really started to lean that direction and then decided to go in pendant about 15 years ago and never looked back.

Yeah, you know, I really like how, you know, an event that was really widespread, you know, know, the economic crisis of 07, 8, 9, 10, 11, 12, you know how that drug out caused you to pivot. You know, you didn't go, you know, work at Home Depot. You went and got into financial services, which was similar to that. So that, and then you noticed that need. So I think that probably back in that, in that time when you got started, you probably did not have the lay of the land as well as you do now. So what are some of those things that you learned in the beginning years as it relates to when you're working with people and they just think that, oh, I just have some wealth, I need you to management. That's the traditional wealth management. But then you started really

dialing that in and coming into your own. What were some of those things that you noticed? So, yeah, I mean, when we look at it, there's several areas, you know, when I look at retirement planning, when I look at wealth management, you know, I kind of look at it as like a 2D puzzle. There's some aspects there that you have to look at, how much time do they have? before they need the money. I was well diversified. But there's not a lot to it. And most people kind of get that concept. What they start to miss out on is there's, it gets very complex as far as, you know, when I go to retire, you know, the questions you always get. When do I take social security? What do I do with my pension? You know, there's certain things that they don't think about like tax,

like what the tax is going to look like. Retirements changed considerably over the years from my grandparents' generation, my parents' generation, you know, my grandparents' time, there wasn't a lot of inflation, so they didn't really invest in the market, and they didn't live very long. My parents' generation all had pensions, so it's a different way of doing things, and the baby boomers are in the 401k generation, which starts to throw in some other areas where you have to think about taxes, everything's tax deferred. So we kind of narrowed it down to five areas that we look at.

that and the name of the company is Summit and we kind of go with the the word trail to talk about taxes, retirement income, asset management, insurance hedge and legacy. Because all the problems that we seem to find all kind of fit into those categories. You know, there's there's so many things that you can go wrong or you may not be aware of. But usually when I start getting into it, people don't understand how Social Security is taxed. and then the fact that they're going to pull money out of their 401K creates this like tax torpedo on top of that to make their social security taxable. So there's all these little avenues that they're just not aware of that we start to bring up. And, you know, the way I look at financial advisors, it's sort of like, to me it's like saying doctor.

You know, okay, you're a doctor. Are you a brain surgeon? Are you a pediatrician? Are you a dentist? Like, what are you? So again, when you talk to people and you say financial advisor, for doctors, not all doctors do surgery. Well, not all financial advisors do retirement planning. Interesting.

Because a traditional wealth management firm, and this is just, you know, I'm not an expert in the industry at all, but it makes me think I have X number of dollars. Please help me manage it well. And they'll go, well, let's put it into this sector, that sector, and let's be careful and look at it every year. and, you know, see you next year. Well, that's, that's just managing one aspect, whereas, like you mentioned, you're getting into things like, well, that's all fine and good, but now what about tax? What about, you know, things like that? So you, is there anything deeper that people need to realize about what a traditional

wealth management firm does or doesn't do? So, you know, the thing is, again, if you have a wealth manager that you're dealing with, that you're comfortable with. Most people, you know, no one wants to get divorced. They feel comfortable in that spot. And that person has helped them. But I say that typically you go through phases when you're planning or building your retirement.

So in your 20s, 30s and 40s you're accumulating. You need one kind of a, you need a wealth manager. You need a financial advisor or somebody to help you. Like, what investment should I be putting my money into? How should I be diversified? That's when you're using that type of a person. typically most of them that's what they do is they manage money so they're they're not necessarily going to tell you when it's time to take social security if you ask them the question they'll

probably give you some answer but most most firms are just interested in how is it balanced how are your assets balance you know so as you get older they make the portfolio more conservative that's the plan and that's not really a retirement plan that's just an investment plan you know as i get older i need to conserve this money so i look at look at, you know, in your 20s, 30s, 40s, you're in what's called the accumulation phase where you're building and you tend to be more aggressive. You tend to, you know, you're trying to build wolf. And then when you start getting into your 50s, 60s, you need to get into what we call the preservation phase. I'm getting ready to retire. I've now built the nest egg. How do I, I need to

shift gears. I can't just put it all in the bank. You know, it still needs to continue to grow, but I need to start preserving some of this. I can't just. I can't just. I need to shift gears. I can't just. I can't keep gambling with all of it. And then you get into what we call the decumulation or the spend down phase of it, which again has a whole new set of rules. So when you're in the accumulation, you know, most wealth managers will tell you in the market crashes, just keep your foot on the gas. Well, that's true because you don't need the money for 10, 15, 20 years. So that is accurate. But you can't do that. If you knew, you know, I use the example all the time. We do a lot of educational workshops.

And I use the example all the time. Does anybody know somebody who retired in 2007? And I get a show of hands. And then I say, what were they doing in 2008 if they weren't shifting gears ahead of time? And they all chucked and laugh and say, yeah, they probably were going back to finding a job

or going to work or Walmart or whatever because half their assets went out the window. So, you know, I think a traditional firm will help you, you know, kind of mitigate that problem. But then when you're in the decumulation phase,

days, there's a whole new set of rules. Because most people I meet have a junk drawer full of accounts. I've got an IRA. I've got an old 401k from here. I've got Roth. I've got some money I inherited. And then it's a matter of like, well, which one of those do you spend first? Which one of those do you, you know, does it matter?

Does it matter? It does matter. You know, because from a taxation perspective or just from, you know, the sort of the most economical way to do it. It matters which one of those accounts you have invested more aggressively. So it's not just the, it's just not the investment part of it, but when I go to spend it, what's the spend plan? You know, I ask most people, okay, you're going to retire and I say, how much do you need? And they kind of roll their eyes around and say, I don't know. I think like, I don't know, what do you think? And there's sort of like no plan there.

Yeah, so you could tell that was the first time they've been thinking about that even. Yeah. So what they constantly do is say, they think of the total nesting, they say, I have X amount of dollars. Is that enough? I have no idea. What's your plan? Yeah. Did you going to buy three Ferraris and a, you know, in a Porsche or are you going to be going

hiking? Are you going to travel the world every month? Well, or are you going to sit tight for? So there is no right answer to every single person. So it really does all depend. You know, the thing that is. it's intriguing me, Jay, is the word decumulation, because I know that people like, I'm going to accumulate money, but then when you get to the certain phase and age where you start going decumulation,

and I like that word picture, you know, that you said, you know, all the accounts in the drawer are like, oh, here's this account and this account and this account. Well, which one do you start using? Because I also know that there are times and ages where you are required to pull money out. And which account can pull it out of first or do you just pull it out of one and think you're good to go? You might have to be making withdrawals and required distributions out of several. So that kind of ties into that decumulation, right? Yeah. And I think people don't really take into consideration some of the things like most of that money.

They usually have money that is taxable from capital gains, which would be traditional investments. Maybe it's not retirement money. just some brokerage money that they have. That's taxed one way. Then they typically, everybody's got a 401k or IRA money. That's tax as ordinary income. But what's the tax? Everybody assumes it was sold to us that you're going to be in a lower tax bracket

when you retire. Yeah. Well, 401Ks came out in 1978, 1980, and at that time, tax brackets were significantly higher. So at that time, it was true. Right now, tax brackets are some of the lowest that have been in history and we're in the most debt we've ever been in. So, you know, you're at what we call legislative risk where the government can change the rules

when they want to change the rules. You're going into retirement with a, I don't know, a million dollars in your 401k, assuming you're going to get taxed at 18%. Well, what if you're taxed at 50%, which is possible? In 1944, the highest tax bracket in the country was 92%. Middle income tax bracket was 50.

So, you know, is it going to go back there overnight? No. But these are the things that you have to plot out and look and say, as I draw this money down, where am I taking it from? What is, what's the most powerful when I say that? I mean, from a tax perspective, like Roth money, the taxes are done. So that is the money you want to grow aggressively and let that pile grow. You don't want to tap that one first.

So again, there's all these rules and regulations and the right way to do it. You could go in and haphazardly try yourself, but literally could save yourself. of hundreds of thousands of dollars by not even buying a different product or anything like that. It's just following the proper flow. And that's again where a retirement planner is going to be different than a traditional wealth manager, which if you ask the questions to the wealth manager, they might understand it. Same way, if you ask a brain surgeon about, you know, how do I remedy the cold? It's probably like, well, you know, I'm a doctor.

So I've got background in it. Yeah. And vice versa, the general practitioner. had one semester of whatever, you know, podiatry, but they're not the expert like an podiatrist would be. Right. Correct. So, you know, you mentioned asset management as the A in your trail methodology.

How does that factor into when you are like making those shifts from those phases? Because accumulation phase, you're going to manage assets maybe a little bit more aggressively, depending on the age. And then you start getting into another age of eight, 50, 60 kind of thing where you're like, let's start circling the wagons. So talk a little bit about how you're advising your clients to manage their assets properly. So we kind of take an approach this way where I look at it in this trail, like I said, where we look at tax, we look at retirement income, we look at asset management, all kind of weave together.

Because if you have a plan for the first two, that helps you with the asset management. So if you have a plan for the tax, how I'm going to take what accounts from. and if you have a plan for where does the retirement income going to come from, something that's going to come from Social Security. If you have a pension, again, so we use this like, I call it bucket strategy. We have sort of three buckets, and then I color them like a traffic light. Red, emergency money, don't touch it. That's just going to be the water heater breaks.

And I've got the green bucket, which is touch all the time. That's the paycheck. So in retirement, it's not about how big the Nessig is. It's what does that paycheck need to look like. So when I'm trying to determine where's the money going to come from, that starts to determine what the asset management plan is going to look like. So again, if I can leverage more of their money into a product that's going to pay on a regular basis, like use, you know, if they've got a significant pension or maybe if they wanted to use an annuity type of a plan, then that allows me to take showing them that I got the base. basics covered. No matter what come hell or high water, no matter what the market does, I've got, I've got this money coming in. It's going to be covered by inflation. I don't care

what the market does. I'm going to have this paycheck. It's going to cover my basic needs. It's not going to cover fancy trips and things like that. But then that allows me to then take the rest of the money and invest it aggressively like when I was 20 or 30 because the reason why you can't invest like in your 60s like you were 20 and 30 is I need the money right now. But if we start to carve out what we're going to use and put that into a plan, then that tells me what's left that I can go ahead and put the foot on the gas. You know, the word plan is making me think of the difference between reacting to something or responding to something.

You know, reacting is last minute, like, oh, this happened. Let's fix this. Put out this fire. Responding is like, okay, we've had this plan put into place. We knew this could happen. Here's what we're going to do. We're going to work the problem with this plan. And so that whole concept we're talking about here, the retirement planner, you've got this plan.

And you're saying, okay, during these ages, you have plenty of runway before retirement. So we can handle a little bit more volatility, maybe more risk. But now we need to start moving into this phase. And so I like that whole feeling of the plan. Talk a little bit about that eye in the trail methodology, the insurance hedge. How does that factor in? Yeah. So we look at insurance and some people don't like insurance because usually they think of insurance as a cost. But to me, you know, again, we focus everything around like summit, hiking, you know, mountain climbing.

And again, it's about tools. So if you were going to go climb Mount Everest, you would make sure you've got the right tools to go up and to come down because they're going to be used differently. You might have a rope that you use one way when you're climbing up and you might use it differently when you're coming down. You're going to repel as opposed to, you know, linking it and climbing up. So, again, some of these insurance products, why is the insurance industry so big? Because they're using your, they're letting you hedge more of their money and less of your money. And I'll give you an example. Some people don't like annuities for different reasons. And I said most of the time you can't explain to me why you don't like it.

But the biggest reason is somebody somewhere didn't use it properly. So again, it's about the tool and how it's used. So when insurance is used properly is going to give you a much far better hedge. For instance, if I had a million dollars, the rule of sum is you shouldn't draw more than 4% in retirement because if you want the pile of last, you're hoping that you're getting a return of five or six so that you're pretty much flipping off the interest. well, if I could carve out, and if so if I needed $40,000, I would need about a million to do it. Well, if I could carve out, say, three or $400,000, put it into annuity and generate the $40,000 for the rest of my life, that hedge of not having to worry about the remaining $600 because that is going to guarantee me a payout. So again, you know, even things like long-term care. People don't like long-term care, and the traditional style policies aren't even really around anymore.

They're more hybrid policies. But all it's doing is hedging for an event where if I need long-term care, which 70% of people are going to need some kind of assistance and it's not cheap. I had an aunt that needed assistance and an uncle. They went in to a home. One had Alzheimer's, one had cancer. And four years later, three years later, they had 500,000 less in their estate. and their kids didn't get that money. So would you rather pay dollar for dollar, $500,000,

or would you rather put $100,000 away and let an insurance company take the hedge and pay the rest? So, again, it's how the tools are used. People look at that and say, well, what if it doesn't happen to me? Again, with long-term care, the new policies out there, what people didn't like about it is you die and you get nothing if you didn't use it. The new ones, you basically get your money back. So it's, again, it's just sitting there.

Yeah, that's a good feeling. because I've heard that from the old policies. It's kind of like, you know, oh, well, your car insurance, you paid all year. You didn't have a wreck. So you're not going to get that money back either. Well, with these new hybrid policies, if you didn't need the long-term care, those funds are still sitting there growing, doing whatever it was intended to do. But it's there if you need it.

Yeah, I look at it as more of like a reallocation of the asset because some people say, well, I'll just pay for it when I get there. Okay, so you're going to self-insure. Are you going to self-insure dollar for dollar or would you like to do it at a discount? What do you mean by that? Okay, well, you could park $100,000 that if you were going to self-insured, you need to park $100,000 somewhere at least for this event. It's probably going to cost you $3 or $400 or $400 or park $400,000 that will take care of the problem.

You know, it's just, you know, again, it's using the tools the right way. So when we look at insurance, it's some people don't have a need for different insurance products. And depending on what's going on in your state, how you leverage insurance. certain kinds of life insurance, how you leverage certain kinds of annuities or long-term care, which some people, like, again, the problem is you Google that stuff and you'll get the devil. You know, some people say this is bad or that's bad. But to me, again, it's if you can just take two seconds to listen to an explanation, a true retirement planner, all these things sit. Asset management and how you invest, you should have an investment strategy.

You should have an insurance strategy. You should have a legacy strategy and a written, retirement income plan. So kind of like you were saying before, you know, there's most of people I meet when I ask them, what's the plan? They sort of close when I hold their thumb up and hold it in the air and say, it's kind of going to look like, I think it's going to look like this. And I'm like, wouldn't you on the, wouldn't you want to see year by year stepped out? The money for this year is going to come from here. The money from next year is going to come from here. No, it's going to be there because how we have it set up. So you sleep at night because

I'm not sitting there wondering, I hope that's going to work. And then it's just a matter of tweaking. Hey, this came up and we weren't expecting it. No problem. We'll just make some changes. You'll leave some room for, you know, change. 100%. Well, I tell you, Jay, this has been really helpful to really get that clear picture of what a retirement planner does versus a traditional wealth management firm.

If someone is interested in learning more about what you guys are doing, what's the best way they can do that and reach out and connect with you? Sure. you can go out and check out our website. It's www. summit, S-U-M-M-I-T, and then a hyphen, and then R like Richard, S-like Sam, which stands for retirement solutions.

So, wwws Summit-R-S.com. And on there, you can see if you wanted to talk to us further about some of these things I'm talking about. You can schedule a visit. We have a cool thing on there that says, what's your retirement tax bill, tax bill going to look like in retirement?

So meaning like what do I look like are going to be paying for taxes? You can attend some of our events. We do tons of educational events all around the area. So that's probably the best way or you can even just give us a call. Our phone number is 860-269-0909. And we're here to help. Awesome. Well, Jay, thank you so much for coming on today.

It's been a real pleasure talking with you. Thanks, Mike. Appreciate it. You've been listening to Influential Entrepreneurs with Mike Saunders. To learn more about the resources mentioned on today's show or listen to past episodes, visit www. www.influentialentrepreneursradio.com.