“Make a plan.”, with Ben Soccodato & Beau Henderson

Make a plan. — If you haven’t quantified your vision for retirement, living expenses, travel, etc., you don’t truly know if you have enough to support that vision. You’re going into the most important phase of your life unprepared. Spend the time necessary to create a financial plan that will accurately reflect what your lifetime […]

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Make a plan. — If you haven’t quantified your vision for retirement, living expenses, travel, etc., you don’t truly know if you have enough to support that vision. You’re going into the most important phase of your life unprepared. Spend the time necessary to create a financial plan that will accurately reflect what your lifetime expenses will be based upon the information that we can reasonably assume.

Ihad the pleasure of interviewing Ben Soccodato. Ben brings more than 14 years of financial planning experience to his role as a Certified Financial Planner professional with Barnum. He has spent the majority of his career focused on educating individuals through financial literacy workshops inside of Fortune 500 institutions and other large corporations. His role in workplace financial literacy was recognized through the 2011 Workplace Leaders in Financial Education Awards for the program implemented at the New York Stock Exchange. Ben participated in the opening bell in recognition for his efforts. He continuously demonstrates his dedication to service by hosting events to raise funds for the Foundation for Life, donating to the Bikes for Kids program for two consecutive years, and sponsoring numerous non-for-profit events each year. Because he prioritizes education to provide impactful client experiences, Ben has successfully attained the CFP®, ChFC®, RICP®, CExP™, and AIF® designations.

Thank you so much for joining us, Ben! Can you share with us the backstory about what brought you to your specific career path?

Incollege I was unsure of my career path. I loved sports and entrepreneurship and considered pursuing sports management to potentially become a sports agent. Nevertheless, my junior year I was given the opportunity of a lifetime to intern at one of the largest wire houses with a team of financial advisors in NYC. I watched what they did every day, focusing on the client and their needs and helping them by putting them in a better position and building long lasting relationships along the way. I immediately gravitated towards the industry and made the decision that I would immediately start working on my series seven exam when the internship finished. I was motivated to graduate with my series seven to be one step ahead of the competition that would just be getting started on the exam.

My firm, Barnum Financial Group, partnered with my college, Sacred Heart University, and offered a program to do a series seven prep course and sponsor students for the exam. The one caveat to this is it required us to interview at the firm, which was based in Connecticut.

I accepted the opportunity with the assumption that, once I passed my exam, I would go to work for a large wire house in New York City. Little did I know that 15 years later, I would be in the same company, leading the top performing team. I immediately gravitated to our firm’s leadership and vision and have never looked back since. I’m very lucky to have found Barnum Financial Group as the home for my entire career.

Can you share the most interesting story that happened to you since you started your career?

One of the most interesting stories of my career is the path I have taken to arrive at where I am. I always believed in discipline and work ethic as cornerstones of my business but didn’t realize that in preaching discipline and work ethic, we were opening the door to burn out in a poor corporate culture. As we were hiring employees that did not have the same drive, motivation, and vision, we ended up having extremely high employee turnover. Year after year it became problematic for me to fulfill the roles necessary to run my business.

Fast forward ten years later, and I am now being asked to speak at industry conferences around the country to discuss how we’ve built our corporate culture.

Getting commitment and buy-in requires all employees, regardless of title, role, salary, etc., to have some level of input and belief in the vision and mission statement. That has been imperative in our team’s growth, as we’ve asked each employee to contribute and co-brand the team’s vision. This has created like-minded individuals with a common goal, all working towards one larger objective, which is creating an amazing client experience and being the top value in financial planning. Employees know the importance of responding to an e-mail or a voice message the same day, as well as providing proactive client service.

This isn’t something that is only coming from the top. It is something that is being preached at the front line throughout our organization. What was once a major weakness and flaw in my business is probably my greatest strength today.

Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?

The most humorous story that comes to mind was very early in my career. I was quite eager to get a deal done, and the client did not have the ability to get into the office due to family obligations. I therefore offered to visit the client at their house. The client agreed and I headed over. Big mistake on my part.

I’m highly allergic to cats, and I didn’t realize that my client had eight cats in her home. I sat down and we started to go through our recommendations. Within a matter of minutes, my throat was closing, my eyes were tearing, and I was having the worst allergic breakout that I’ve ever experienced in my life. Needless to say, the meeting had to end early, and I found the nearest pharmacy to take care of myself. That was a lesson learned as any time I’m outside of the office in a meeting I make sure to ask if there are cats, so I can prepare appropriately with the right medications before the meeting.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Paul Blanco would definitively be that person for me. Paul Blanco is the CEO and founder of Barnum Financial Group. He has been the most inspirational person in my career by far. His ability to serve as a leader connected to his culture, maintaining interpersonal relationships while seeing the company go from 50 to 600 employees, has been impressive. More importantly, the way he conducts himself as a father, husband, friend, and businessman, is even more impressive.

Any major decision that I have made in my career, such as adding partners to my business, pursuing new markets or adding to our client support team, have come via consistent conversation with Paul.

I admire Paul’s work ethic and discipline, he has helped me to think bigger and set the bar higher each year.

What advice would you suggest to your colleagues in your industry to thrive and avoid burnout?

This may be the wrong question for me to answer …… I had the privilege of hearing Theo Epstein as a platform speaker at one of our industry meetings a few years ago, and I think he said it best. If your ambition is to be a major success in business, accept the reality that there is no such thing as work/life balance in your 20s and 30s. Just work, he said. Do the things that your boss doesn’t want to do. Take those off his desk, and you will get noticed. That’s how he became the youngest general manager in Major League Baseball history.

At 36 years old, I’ve had the fortune of impacting more clients lives than most who are 10 and 20 years my senior.

One strategy that I employ and have for years is work really, really hard for 90 days and then take a deep breath and decompress. At this point, I evaluate my performance and objectives and set new objectives for myself and my team. I find that this 90-day mentality segments my year into small, obtainable time frames to hit goals. Our entire team adopts this strategy, and it has been a huge part of our success.

Goal setting is at the heart of everything we do. Whether it is with the client or in our own business, we consistently set goals and measure them. The most helpful book that I received relative to goal setting is called the Dream Book by Billy Cox. It breaks life down into five quadrants: Business, personal finance, health, relationships, mental/spiritual.

Write goals in each of these critical areas, put a timeframe on each goal and stagger both short- and long-term goals.

The most impactful thing for me every year is to look back at not only what has been accomplished but more importantly how my mindset has grown. It’s exciting for me to look at past years’ plans and reflect with my business partners and spouse.

What advice would you give to other leaders about how to create a fantastic work culture?

Live by the inverted organizational chart-

The client is on the top. The frontline employee is underneath them. Then the management team, then ownership/executives. By building our culture this way, not only is the client happy, but the employee is happy. We had found that having an open dialogue meeting (we call it traction) where we can share our struggles collectively in the business, vote on them as a team, and decide how we’re going to attack the project together has been very useful in growing through challenges. We have also established on a quarterly basis that, as our team wins and hits our objectives, we need to celebrate. And every quarter we take a day out of the business and we go to a ball game, or go paintballing, go-karting or to an amusement park. We participate in something fun outside of the four walls of the office to allow the team to have a good time together, no matter what their role is in the company. Finding commonality outside of the four walls has been a huge distinguishing factor for us as a team.

Building culture to me is the most important thing in business. I firmly believe that if you have the right people with the right mentality, even if their skill set doesn’t perfectly fit the job, you’re still going to have wild success. People trumps all, process, product, etc. Culture was one of the hardest lessons that I learned in business. When I was young, starting off, and hiring my first set of employees, I couldn’t understand why everybody didn’t have my mentality. If something had to get done, it had to get done. If that meant staying late or coming in early, that’s what it meant. It was hard for me to distinguish that there are different roles in business, and not everybody in life is built the same. In other words, there are not only apples and oranges, but there are also apples and watermelons. What I also needed to realize was that it took people from different backgrounds and skill sets to really create a corporation or enterprise. It couldn’t be built off one person’s mentality if we’re really wanting to grow as large and fast as desired. Finding people with different profiles, backgrounds and life experiences has been very influential in growing our business.

The biggest thing that we have done relative to culture is allowing our executive team to define what our company’s mission statement, value proposition and annual goals are. We’ve asked for input through open dialogues, tough conversations and in many cases hard decisions to define these aspects of how we run our business. By doing so, it wasn’t just buy-in from the top. It was buy-in from all. We believe in an inverted organizational chart where the client is on top but below them is the front-line employee. If that person is happy, ultimately the client will be happy.

Ok thank you for all that. Now let’s move to the main focus of our interview. Retirement is a dramatic ‘life course transition’ that can impact nearly every aspect of one’s life. Obviously everyone’s experience is different. But In your experience, what are the 5 most common things that people wish someone told them before they retired?

1. Make a plan. — If you haven’t quantified your vision for retirement, living expenses, travel, etc., you don’t truly know if you have enough to support that vision. You’re going into the most important phase of your life unprepared. Spend the time necessary to create a financial plan that will accurately reflect what your lifetime expenses will be based upon the information that we can reasonably assume.

I just sat down with a family that’s making north of $250,000. Their only annual savings currently is maxing out a 401(k) (25k p/yr.) They’re essentially spending the rest. Their all-in expenses are north of $12,000 per month to maintain their current lifestyle conservatively. They want to retire in three years and are dead set on the Social Security full retirement dates as when they want to retire. Unfortunately, there is no guaranteed income from pension, there is only a Social Security income stream and less than $1M in retirement assets to live off. When we ran a retirement model the client would have to reduce their spending by over 50% and had never acknowledged the fact that they were not on track but considered themselves mentally three years away from retirement. Taking the time necessary to plan, enabled us to open up conversation relative to different living situations, spending habits, etc. Had the client not engaged in the planning process, they potentially could be setting themselves up for true failure.

2. Understand the costs of health-related expenses in retirement. Fidelity estimates the average 65-year old couple will spend $285,000 over the course of their retirement on out of pocket medical expenses. This expense does not include expenses attributed to long-term care. Have you appropriately accounted for these expenses inside of your financial plan? Have you assumed the appropriate inflationary rate on these expenses?

The modeling we traditionally do will inflate these expenses by north of 5% per year as that is the expected inflationary rate on Healthcare expenses over the next decade. Long-term care is the one major risk that folks hate to plan for yet the probality of needing care is essentially the flip of a coin. This may include someone coming into the home to provide services or having to go to a facility, such as a nursing home or assisted living facility. We need to raise the question, “if something happens to one of the two of you, but the other was still healthy, what impact does that have on the retirement plan?”

Understanding what your out of pocket exposure is and how that can derail your retirement plan is a huge area of concern and planning for pre-retirees.

3. Understand the laws of distribution. Climbing up the mountain is very different than coming down. The same is true for portfolio management and retirement income planning. How we got to the top is not how we will safely get to the bottom. When we’re growing our portfolio, the most important factor is the average rate of return over the course of our investment life.

When we are distributing our portfolio, the greatest determining factor is the consistency in which we receive our returns throughout the course of our lifetime — meaning the average return over a period of time in retirement, while taking distributions is much less important than the consistency in which we got those returns.

We encourage clients to take an approach that will structure their money in three buckets. The first bucket would serve as a volatility buffer, or a risk-less portion of our portfolio. This could be something along the lines of a CD in the bank, a money market account or a highly rated government or municipal bond, which would cover approximately two years’ worth of necessary portfolio distributions. Meaning if I need $50,000 a year off my portfolio, I have $100,000 segmented in my first bucket of money, my risk-less bucket. In the event that the market has a dramatic pullback, as we saw in 2008 and 2009, the plan would be for me to live off of that bucket of money, enabling the other portions of the portfolio to grow back over time, ensuring that we would not have to distribute from the portion of funds that were exposed to risk and market decline is one of the most important factors in long-term, successful portfolio management. The second bucket would be focused on maintain liquidity as well as outpacing providing income via dividends etc. The third bucket is most focused on growth and outpacing inflation long term.

The three-bucketed approach enables you to structure your portfolio with different levels of risk with each bucket of money serving a different role in your financial plan

4. Don’t forget about Uncle Sam. The risk of rising taxes is a true threat to the vast majority of retirees. The reality of the world of retirement planning is that most individuals have the vast majority of their resources in pre-tax funds. This creates a major tax exposure as we work our way through retirement. What if tax rates go up to Reagan-era rates? Think about the impact if you 25% assumption goes up to 40% if all your money is coming from pretax funds? Pre retirees need to take the time to prepare a tax-diversified portfolio that would give them the flexibility to pull from tax-free resources and control the overall tax burden. Tax diversification may prove to be more important than traditional portfolio diversification over the course of our lifetime. Unfortunately, this isn’t an area that’s being stressed in the marketplace. It’s more so put money into my 401(k), build it up, and we’ll worry about distributions later.

5. Protect what you have built. Lack of estate planning in coordination can be disastrous for those that need to deal with the repercussions. You’ve worked your whole life to build up your estate, but unfortunately, don’t spend the necessary time to appropriately plan for where you wanted to go and how you wanted to get there. This is a major problem that we need to address regardless of how unpleasant it feels to discuss our own mortality. Not having the appropriate legal documents, like a will, a trust, power of attorney, healthcare proxies or a living will can create major problems for the ones that you care about. This problem effects everyone even the ultra-high net worth and celebrities from Prince to Aretha Franklin to Heath Ledger to James Gandolfini to Anna Nicole Smith — the list doesn’t stop for those high-profile celebrities that failed to plan or plan appropriately. Don’t work hard to build it and forget to protect it.

Let’s zoom in on this a bit. If you had to advise your loved ones about the 3 most important financial issues to keep in mind before they retire, what would you say? Can you give an example or share a story?

1. Make a plan. — If you haven’t quantified your vision for retirement, living expenses, travel, etc, you don’t truly know if you have enough to support that vision. You’re going into the most important phase of your life unprepared. Spend the time necessary to create a financial plan that will accurately reflect what your lifetime expenses will be based upon the information that we can reasonably assume.

map out income streams and pair them up with expenses, i.e. my Social Security will cover the mortgage and utilities. My pension will cover groceries, automobile payments, and cell phone, etc. Quantify the cost of retirement by helping folks individualize their plan and vision.

2. Understand the laws of distribution: I have had the privilege of working with many executives in the financial services industry over the course of my lifetime. I will never forget, back in 2008, as the market was crashing, a major financial firm we were working with was going through a series of layoffs of their top executives and high-ranking management team and asked our firm to support these individuals in their planning. Most were in their prime earning phase of their lifetime, mid-50s, and had gotten their wings cut from underneath them. In many cases, they were anticipating working another 5–10 years and being able to save for 5–10 more years. The loss of their income, coupled with the downfall in the equity markets, created the perfect storm where people had to now live off a depressed portfolio. People who were not accustomed to budgeting were forced to budget in a very serious manner. This impacted lifestyles and created serious financial hardship. Many of them never returned to positions at that income level due to their stage in life and skill set. Unfortunately, this impacted them for the rest of their lives.

3. Protect what you have built. Don’t be a statistic. It is estimated that 50% of adults don’t have a formal estate plan. That means that some judge you never met is going to figure out where your stuff is supposed to go. Opening the door to unnecessary fees, public scrutiny and predatory behavior. Pull the band aid off and get your estate plan done.

If you had to advise your loved ones about the 3 most important health issues to keep in mind before they retire, what would you say? Can you give an example or share a story?

  • In advising clients about their health issues, I would first and foremost want to ensure that they’re taking care of their mental health, they’ve planned out their days in retirement, so they will feel fulfilled and occupied. Thinking about what physical activities they will take part in will keep them engaged with their physical health. I hear many clients say they’re going to exercise, start biclying, golf, etc., but don’t really have a plan to start. So, expanding upon the thought and asking who would you start with, where would you play, etc., is helpful conversation.
  • I’m stealing this from a Steve Jobs quote, eat your food as medicine, otherwise you will eat medicine like it’s your food. Every action has a reaction. Understand the lifestyle we live in our 30s, 40s, and 50s will have impact on our time spent in our 60s, 70s, and beyond.
  • Understand what your health insurance programs will cover and what you will be exposed to. Coming back to financial matters and what we’ve discussed previously, Medicare on its own is not going to cover 100% of expenses. There are exposures that you need to be aware of relative to co-pays, co-insurance, and long-term care expenses. Don’t get caught by surprise, budget out these expenses and put reasonable inflation assumptions on them.

If you had to advise your loved ones about the 3 most important things to consider before choosing a place to live after they retire, what would you say? Can you give an example or share a story?

1. How conducive is the house you’re planning on retiring in to aging? Meaning, how many stairs do you have? How will you get groceries and packages in? What type of upkeep is expected in your home; roof, windows, furnace, major items. Are you somebody who wants to live in modern luxury? If so, how frequently will you have to renovate or update in order to keep to your standards. All of this can be forecasted inside of a financial plan.

2. What is your proximity to loved ones? Many times, where a retiree ends up is based upon where the grandkids are. Does it make sense to plant your roots or make large capital investments in a property you don’t know for sure you are going to stay in? Have you built in the cost of travel if your loved ones are not close to home? How frequently will you travel? Where will you stay?

3. Is your retirement home financially reasonable for your retirement plan. Property taxes, local income taxes, carrying costs, and unlocking equity, all need to be conversations. For example, I’m dealing with a family that lives in the highest tax town in Westchester county NY. The property taxes on their house are approximately $40,000 per year. Their kids are out of the schools, and they are retirees. The town next to them has less of a school system and about 60% of the property tax. They could ultimately live within a two-mile radius of where they live today and save themselves north of $1,500 per month. What is keeping you here? I asked. Their main rationale was it was where they’re comfortable there, their kids grew up there, etc. I then asked would you find it to be more enjoyable to take your entire family on a vacation to a tropical island, have all expenses paid and likely still have cash left over at the end of the day, and live two miles from here? When you can frame things in a way to make people think about the experiences, they can have with the ones they care about, it enables them to have better perspective on the situation.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

To not go too deep into geo-political matters… I’m going to stick to my industry on this one. The one suggestion that can impact humanity positively, is to increase competency of the financial advisor.

To be an attorney, you need to pass the bar exam. To be a CPA, you need to pass the CPA exam, plus have the industry experience to verify that you are professional. To call yourself a financial advisor, you need to pass a securities exam and perhaps get a life and health insurance license. The accumulative amount of studying required to get these exams done is such a small fraction of the CPA or Bar exam it’s laughable.

To help solve America’s personal financial planning dilemma, a suggestion would be that an advisor cannot accept assets from a client without being a Certified Financial Planner Professional (CFP) .This should be the standard in our industry, which would fix a lot of the conversation relative to fiduciary responsibilities of advisors.

Is there a particular book that made a significant impact on you? Can you share a story?

A book that significantly impacted my business is the E Myth/E Myth Revisited by Michael Gerber.

It discussed taking a financial planning practice and turning it into a business and then turning that business into an enterprise. And it clearly distinguished the different phases that a business owner would go through in reaching these steps. It distinguished what needed to happen in each phase for you to arrive and evolve, and for me, it made me to focus on systems and processes to become scalable.

Systems and processes create a WOW client experience. Everyone knows exactly what the next step of the process is, allowing us to grow while not deteriorating the quality of the advice that we’re providing. It’s a must-read for any business professional.

Can you please give us your favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life?

The first one that comes to mind comes from a lifelong friend. In growing up and dealing with life’s struggles whether that be in sports, relationships career paths, etc., we use this saying to get through tough times.

Take a step Back, Assess the Situation, Dominate!

It’s a simple three step process which has enabled me to handle stressful situations with more perspective and take action.

It’s a three-step process that will enable you to grow.

What is the best way our readers can follow you on social media?

LinkedIn: Ben Soccodato

Facebook The SKG Team at Barnum Financial Group

Thank you for all of these great insights!

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