Promoting Financial Literacy

Today, our guest is Matt Wheeler. Matt is Managing Partner of Wheeler Accountants LLP, a full service tax and accounting firm in Silicon Valley. Matt is co-host of the podcast Avocado Toast, which concentrates on giving financial and tax information and advice to HENRYs, which as of a week ago, I had no idea what a HENRY was. So I’m gonna let Matt define that. But before we go there, Matt, welcome to the show.

Thanks for having me. I think it’s my first time being a guest on a podcast. I’m excited.

I had my first time a couple weeks ago, which will be released about the time your podcast is released. So yeah, it’s fun. I’ve got a feeling we’re gonna have a good time today. So first thing that I want to jump right into is, what the heck is a HENRY?

What is a HENRY? Great question. I only learned about this a couple of years ago myself. When I heard it, I loved it, because it describes some of the early clients we get here. I think it’s probably most commonly associated with some of the metropolitan areas, you know, and HENRY stands for “High Earner Not Rich Yet.” So it’s anybody that has a relatively high income, but they just don’t have that accumulated wealth or anything built up yet.

So just they’re early in their careers. I’m assuming it’s probably a millennial. I don’t even know the generations right now. Are we still in millennials? Or is there a new one now?

I’m on the older side of millennials, born in ’81. So yeah, it’s mostly millennials, some Gen X, maybe Gen Z now, you know—people generally earlier in their career, not a lot of savings.

So early on, making some money, probably no idea what to do, how to handle it, how to manage it, you know, how to start tax, all those things. So, how did this become—I mean, I assume you consider it a niche? How was this something you always, like—you only knew what a HENRY was two years ago, so you didn’t always want to work with HENRYs, but the concept of working with these individuals? Is that based on a just a passion you have, it’s based on your location? How did this come about?

Yeah, I’ve always been passionate, mostly about individual tax on the individual tax side of things, the posts of the business. And we’re located here in Silicon Valley, so I’ve always had a decent client base of people that had equity compensation as like a primary driving factor in their income. So lots of stock options, obviously, and that kind of thing.

And I just started getting lots of referrals for clients that had unique equity comp situations, or they were approaching like a liquidity event or something like that: their company was going IPO, it was going to get bought, they had a lot of stock, so I kept getting a lot of similar clients in this space, you know, with the same kind of general fact pattern. And then, you know, they have the same situations and opportunities. And so I just started getting a lot more of them, and that’s how it came into play.

Silicon Valley, there’s probably a lot of that stock options, which I still don’t really understand that well—you’d think I should as a CPA—that’s why you’re out there and rising and getting them information.

So besides the stock options in that, you mentioned “Unique”—way to play into the name of the podcast, I appreciate that. But other unique planning advice, and I know you have an acronym that I’ve learned listening to your podcast: RETIRE. So I don’t know if you might get into that now, or anything unique that comes up?

Yeah, well, I started getting a lot of you know, more millennials and Gen Z types of clients that are making a lot of money—software engineers here in the valley or whatever—and they have equity. We have a podcast for our firm—Debit This, Credit That—and I invited one of my clients who’s also a financial advisor on one time to talk ,and we decided to do one on HENRYs, you know, as one of our topics. And Eric and I—he’s my co-host on the Avocado Toast podcast—we kind of hit it off.

[bctt tweet=”A lot of the HENRYs, millennials or even, you know, Gen X or older—they don’t know a lot of some of the basic concepts on tax planning, financial planning, and that kind of thing.” username=”TriMerit”]

And we’re both really passionate about, you know, financial planning for the HENRYs: millennials. And it just naturally came about. We decided to start the Avocado Toast podcast together to kind of jointly do a podcast targeting these these types of clients. So Eric has an acronym that he brought to the table from his financial planning background called RETIRE. And that stands for you know, Risk management, Expense management, Tax planning, Investments, Retirement planning and Estate planning. So it covers all the basics of creating a financial plan.

And our goal of doing the podcast is to, you know, raise awareness and financial literacy basically. A lot of the HENRYs, millennials or even, you know, Gen X or older—the people that we encounter—they don’t know a lot of some of the basic concepts on tax planning, financial planning, and that kind of thing. These things aren’t taught in school, in high school or college. I mean, everyone’s got to figure it out on their own, and some people are better than others, but people need this advice, and our goal with the podcast is to target the folks that maybe aren’t ready yet to hire a professional.

You know, money can be tight when you’re a HENRY. You’re making a lot, but there’s also a lot going up a door, especially if you live in Silicon Valley, or New York or somewhere where rent’s high, child care’s high, you know, all these expenses are really high. There’s a lot you can do to save a lot, and it’s a lot you can do to save on taxes, and take advantage of opportunities available to you, but you have to have the knowledge. And so our goal with this podcast was to spread some of that and target those people earlier.

Yeah, it was. So I listened to quite a few of them, and starting from the beginning, where you do go through that—the RETIRE. And it was like, I’m listening to it, And I’m like, “Well, yeah, that makes sense. It makes sense.” But I’m going, “Okay, these people just don’t know, it’s, they’re starting their careers, and this is something that, you know, at 58 years old, I guess I’ve learned over the years, but when you look back someone 25, 30 years old, they need that advice.”

And I’ve seen that just from you know, I have kids in the mid-20s, and, you know, the thinking that there’s obvious things they should know that they just don’t know. So I’m starting personally to do that type of education, but it’s cool to see that you’re doing that.

Do you want to go through—expand? I mean, the risk management seems pretty obvious, you know, make sure you have insurance to protect anything that’s catastrophic.

Well, that’s the thing! Seems obvious to you and me. But it’s not to a lot of people, so it’s important that we we go over those things. So the risk management, expense management and tax planning, those are kind of considered the foundation, the baseline, you know. Risk management, you obviously want to protect your downside. So we cover a lot on, you know, things like getting Term Life Insurance, which is inexpensive, and hopefully you don’t need it, but if something terrible does happen, and you know, one of you passes away early and you have small kids or something, you’re going to need to have that money. So we cover, you know, basics like that.

Expense management, also, again, kind of like a baseline thing, making sure you have an emergency fund built up, making sure you learn some basic budgeting techniques, and we have a rule, we called the 50/20/30 rule for budgeting, which is kind of easy to understand and use, you know, things like that.

And then tax planning, just understanding some basics on how taxes work—what you should expect, trying to dispel some of the common myths, like, you know, getting a refund when you file your taxes, it’s like some windfall or something—it’s your money the government’s had the whole year. Things like that.

So we try and lay the foundation with those, and then investments, retirement planning, you know, those are more starting to build upon the foundation. So starting to learn some basics about how investments work, going over the various types of investments: What’s a stock? What’s a bond? What’s a mutual fund? How do they work? How did the fee structure work on those? What kind of returns can you expect over the long term? Why you shouldn’t try and time the market and, you know, do all your own day trading stuff? Or if you do, only do with a tiny little play account, and don’t do it with the entire nest egg, right?

And then retirement planning, similar kind of thing: Understanding the retirement plans available to you, taking advantage of your employer match, if you have a 401(k) understanding what a IRA or a Roth IRA, how they work.

HENRYs—High Earners Not Rich Yet—in Silicon Valley are the core of Matt’s financial planning clientele

And then the last piece of it is estate planning, which, you know, for HENRYs, it’s not that important from the standpoint of trying to save on estate taxes, because they’re not wealthy yet and the limit’s very high. But getting the basic structure in place, a will and a trust, understanding why that’s important to have, understanding you need to name beneficiaries on your accounts, just basic, practical things like that.

Yeah, you know, when I was listening to that it’s just like, that’s amazing. I love the idea that you came up with here to give this advice. The funny thing is, I was talking to someone yesterday, who actually, you and I were talking about also, before this, and yesterday a little bit. And she was asking me about whether I’ve ever educated, done any teaching for kids growing up, because she said her son who’s in I think middle school right now—they had a short term financial planning class, which she said was unbelievable, and she said, “My kid’s never gonna leave this school”—because the stuff that they’re teaching them now, she was never taught. And to hear that they were starting that early, she was just thrilled. I think you’ll be talking to her soon. So she’ll be thrilled to hear that you’re doing this as well! That’s pretty cool, yeah, starting that that process early, I think is great.

So here’s a question I have when you’re dealing with these clients: Is this a more of a long play from a from a client standpoint? I mean, right now you’ve got when you’re dealing with them, and you got, personally, as the tax advisor, tax preparer, the tax return. And then there’s probably some unique things that come in with the stock options and all that. But then, you know, as they grow the wealth and you know, maybe there’s a business involved, and maybe there’s an exit strategy down the road, and obviously, you haven’t got, I’m assuming to that point with these clients, since it’s a fairly new process. But really, I’m just curious if that’s what you see this going—growing this and then as they grow, obviously, there’s more opportunities for you.

Yeah, that’s exactly it. I get a lot of the referrals, like I said, but a lot of times, they don’t come to me, until, you know, immediately before the liquidity event, right? They wait till the last minute. And that’s when they get the intro on, like, you know, “Hey, I got this seven or eight figure windfall coming, I need some tax help now. I’ve been doing TurboTax this whole time.”

They come to me at that point, and a lot of times, you know, I’m sure your listeners can relate to this, someone comes to you, and it’s too late to really take advantage of some of the real big tax breaks available. Like, you know, I deal a lot with what’s called qualified small business stock, for example, at the tech companies, and that has to have like a five year holding period on your shares. So if you didn’t acquire early, you blew it sometimes, and that can be a gigantic tax savings.

So part of the motivation behind the podcast is to get some of that advice out to some of those people earlier, when they’re not necessarily willing to, you know, hire me or another CPA at the early stage—but at least start to get them some of that knowledge—and then yeah, hopefully, they’re gonna funnel into us and become a real client, you know, if you will, when they have actual difficult texting is going on.

And you know, so far, the ones that have come to have a liquidity event, a lot of these serial entrepreneur types, you know, they’re on to the next thing right away, and they go “Hey Matt, by the way, do you guys do business taxes and accounting?” Oh yes we do, absolutely. And, you know, so it leads into other stuff relatively quickly. So it has been a good pipeline for the other services we offer as well.

[bctt tweet=”Qualified small business stock, for example, at the tech companies, has to have like a five year holding period on your shares. So if you didn’t acquire early, you blew it sometimes, and that can be a gigantic tax savings.” username=”TriMerit”]

Which is great to get that pipeline, so how do you start that pipeline, though? If they’re not coming to, you know, at least now, until often that liquidity event’s happening, what are you doing proactively to get to them earlier, I guess?

Well, I have lots of relationships with other financial advisors in the area, so they generate the bulk of my inbound referrals. They get to some of these clients a little bit earlier. Silicon Valley Bank has referred me a lot of clients—they do banking for a lot of startups. They’ll know about an upcoming transaction sooner, and that’s when I get introduced to a lot of the founders. Often some of the bigger firms are doing like the corporate work, but they’re not paying attention to the founders or to the early shareholders, and so that’s an opportunity for us to get in there and snag those clients.

And then the podcast: The Avocado Toast podcast, that’s, you know, my other plan to try and get to some of them earlier is by spreading the word there. If they start to get some tips from us, they like what they hear, they’re going to come to a point hopefully, where they graduate from being a HENRY, to being a high earner and wealthy. And that’s when they can be, you know, one of our clients as well.

And then I think you mentioned to me before we started taping here—but that you’re starting, and I’ll get this wrong, but almost like a subscription program to certain aspects of the podcast. How’s that work?

Our podcast is free. It’s out there on iTunes, Spotify, you know, all the usual channels, and we’re just launching the Avocado Toast Financial Planning Club. So that’s going to be a monthly subscription club you can access, and it’s basically going to have additional premium content. We’re gonna have worksheets and flowcharts and articles and all that kind of stuff. Our targets are really these people that are doing DIY financial planning and tax prep now, you know, and they’re spending time googling all kinds of things on how to pick the right 401(k) options, how to pick the right, you know, employer benefits and take advantage of, and all these kind of things. We’re trying to consolidate a lot of that into one place and give actionable practical advice.

And then we’re also going to do some, you know, live Q&A stuff and that kind of thing. So they can run some of their specific fact pattern items by, you know, a CPA and a CFP, and get some little more targeted advice without having to, you know, fully engage with us at that point or with someone else early on.

[bctt tweet=”The mistakes I’ve seen, by the time someone comes to me, that people could have taken advantage of—they could have saved thousands, tens of thousands, hundreds of thousands sometimes on the qualified small business stock stuff.” username=”TriMerit”]

I think that’s awesome, too. As a CPA, I think, at least me personally—and I think maybe a lot of CPAs—try to do a lot of this stuff on their own that they shouldn’t even do, from the financial planning and even that standpoint. Honestly, I really wasn’t working with a financial planner until the last year or two, which is probably really bad advice, DIY on my own end. So I think anybody out there listening from a CPA standpoint that can see what Matt’s doing—advising his clients—I would highly recommend it.

You probably had questions the whole time, right? As things popped up. And 30 bucks a month isn’t that much to a HENRY couple making $5-600,000 a year. So our idea is they get in there, they can ask some of those questions, and we should be able to generate a lot more value than that really easily.

The mistakes I’ve seen, by the time someone comes to me or that have come to Eric that people could have taken advantage of—they could have saved thousands, tens of thousands, hundreds of thousands sometimes on the qualified small business stock stuff. If they just would have done like one little thing differently, earlier. So that’s our goal is to find those peopl,e to help them and to give them some of this advice, you know, via our Financial Planning Club in the podcast.

I was gonna say, I was about to get to the point where we did any final thoughts on that, but I think you just wrapped it up nicely there, unless you want to add anything else that that you didn’t summate so well.

I think we covered it. We’re gonna we found everything off the RETIRE acronym. So we’re gonna have a monthly theme, and the club, and you know, spend a month going over the risk management stuff, and stuff on the expense management. So we’re going to keep going along with that retirement thing. It’s just going to be more content and a little more personalized inside the club, as opposed to the podcast. But the podcast itself will always be free and available to anyone to go listen to and download.

Well, I’ll tell you this. Like I said, My kids are mid 20s, I am immediately telling them to go start listening from episode one—which was the introduction—episode two is really where you start talking about the RETIRE. I am definitely going to do that. And all their friends, I’ve coached about 1000 kids over my life, I think I need to get to all of them now, tell them they need to do this, and they’ll be thrilled, you know, 20 years down the road, from everything that they learned and put into place.

Well, I appreciate that. I’m just—the more I listened to the podcast, the more I’m like, “Man, this is just unbelievable information. I wish somebody would have done this with me 35 years ago, because I would’ve retired 10 years ago already!” Nah, I enjoy what I do, but I would have had that opportunity.

So we’re gonna wrap up here in a minute, but I want to talk to you about one thing specific that I you know, reading your bio, and I’ve seen this a few places and I’m intrigued by people that put in all the time and effort to get to the top of the mountain in a certain activity, whether it is being a CPA or whether it’s being, you know, whatever—online poker—but whatever it is. But reading yours, and I’m really fond of athletics—you were, seems like, a pretty good swimmer in your day, huh?

Spent a lot of time chasing the black line, Randy, at the bottom of the pool, so.

So that’s what you call it, chasing the black line. I like that. So give me an idea. I saw you, it was at University of California Santa Barbara. And I think I saw you were two-time—is that Big West? What is the conference?

Yeah, we were Big West at the time.

And you were two-time Swimmer of the Year.

Yep.

That’s pretty high up there.

Matt was a two-time Big West Conference Swimmer of the Year and competed at the U.S. Olympic Trials in 2000.

Yeah, not too bad. You know, I started swimming, I think in we have like we call rec or club swimming, when I was like seven I think. In the summers, it’s very popular here in California, especially like in the Bay Area in Northern California. And then I started swimming year round when I was 10. And you know, I excelled at it. My dad was actually a swimmer also, so we have a little bit of it in the genes.

And I did pretty well in high school. I got to travel around the country to various swim meets, and and be a part of the national competition scene which was fun. That led to a full ride scholarship in college, so college was free. A lot of hours—it’s you know, morning and afternoon practice five days a week and then morning practice on Saturdays. So like I said, a lot of time chasing the black line, but it really instilled discipline and delayed gratification—I think are the biggest things. And there’s no, like, unless you’re Michael Phelps, there’s no career in swimming, so you know, also make sure you’re not just trying to go pro or something like you know. I feel for, sometimes, the minor league baseball guys that like think they’re almost gonna make it and they spend like years and years in the minors making nothing, you know, rather than go into a career.

So I did something all through high school and college. I was fortunate enough to compete at the Olympic trials in 2000, so I got to swim there. I have swam against Michael Phelps before in the 400 IM in the same heat. You can guess who won that race, but—

Well you, obviously!

Yeah. Not even close. I think I barely saw his feet. A lot of bubbles.

Swimming was my life all the way through college, basically. And then when I graduated, I had to, you know, find something else, and that’s when I found accounting and taxes especially, and that’s been my main focus since then. But early on, I always had the summing stuff in my bio because that was like—that defined me for the longest time.

I still try and swim a little bit but with COVID a lot of the pools are closed, so it’s kind of a bummer. The only thing I do now is my buddies and I do an annual relay race every summer at Lake Tahoe. The Olympic Club puts on something called the Trans-Tahoe Relay, and that’s a blast. That’s the only competition thing I still do. So you get a team of six people, you get a boat, everyone takes a turn. It’s about I want to say it’s like 10, 12 miles, something like that. It takes about four hours for us to I don’t know, everybody goes 30 minutes until you’re through one round, then everyone goes 10 minutes till you’re done. But it’s a lot of fun. And that’s the only swim competition thing I still do.

Well, that’s nice. So that so that’s one question I was gonna ask—Was it ever a job? And I’m guessing it felt like it, but you still obviously have a passion for it, if you continue to do it, which is cool to see.

It clears my mind, you know? I run a lot to now, because it’s a little easier to go out and run than to do the swimming. But it’s the same thing. You just kind of get into a groove, and I actually spend a lot of time thinking about my business and ideas pop into my head, kind of like shower thought type things, you know. But it happens when you’re in the pool, or when you’re running when you just kind of going with the flow and let your brain relax. So it’s a really important part of just my routine is exercise and swimming serves that function quite well.

Yeah, it’s funny—I don’t know if funny is the right word—but a lot of the people that I’ve had on the podcast have said similar things, that running or some kind of athletics helps them in business as well, which makes a lot of sense. And you can see why they’re leaders in their industry, just because of that.

So I appreciate the time here today. Before we final wrap up, contact information. Obviously, we know the podcast, website, LinkedIn, anything else you’d like to share?

Yeah, the Avocado Toast Podcast is available on iTunes and Spotify. You can go to our website, avocadotoastpodcast.com,to learn more. There’s a link on there to The Club. If you want to learn more about the club, I’d encourage anyone to sign up to our email list—they can learn a little bit more about that, when we’re launching here shortly.

My firm, Wheeler Accountants, we’re at WheelerCPA.com. And then we’re obviously all over social on both of those. So Twitter, Facebook, the whole deal—we’re available there.

All right, well, that’s awesome. Well you and I got to have a beer together virtually a week or two ago—I’m looking forward to being able to travel again and have a beer in person.

So again, appreciate you having on the show. I think this is invaluable information. And maybe I’m somewhat biased because of the age of my kids, but I could see this being awesome information. So again, thanks!

Thanks for having me, Randy.

Thank you for joining us today. And you can find all the links and show notes for today’s episode as well as more about Tri-Merit at TheUniqueCPA.com. Remember to subscribe and join us for our next episode where we’ll be going beyond compliance into forging new pathways of delivering value to clients, diversifying your revenue streams, and leading edge management techniques and styles.