Episode 120: Retirement Planning 101: How To Protect Your Future [featuring Ryan Derousseau]

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Transcript

PATRICK CASALE: Hey, everyone, you're listening to another episode of the All Things Private Practice podcast. I'm your host, Patrick Casale. I'm joined with Ryan Derosseau, who is a certified financial planner who helps private practitioners and therapists enabling them to thrive financially so they can focus on clients. And this is a topic that I think is really important. We are getting closer to 2024. A lot of you in private practice are probably like, "Shit, I haven't even started a retirement plan. I don't have a retirement plan. It scares the hell out of me." So, we're going to talk about that stuff so it makes it feel a little bit easier for all of you, and you can start getting your safety and security in order. So, Ryan, thanks so much for coming on.

RYAN DEROUSSEAU: Yeah, thanks for having me. I'm always up for talking about these types of topics. So, yeah, I'm excited to be here.

PATRICK CASALE: So, tell the audience a little bit about who you are and why therapists and private practitioners in particular? Why is that the passion or the area that really sparks you?

RYAN DEROUSSEAU: Yeah. So, my route to what I do, like probably many therapists out there is a little long and winding road. I initially started out as a writer. I was a personal finance writer for a number of years. I wrote for magazines that most people have heard of like Fortune, Money, talking about investments, and sort of what's the best thing to do with money. But the entire time I did that I worked for myself. I was a self-employed writer, and I never particularly liked working under an umbrella or anything like that.

And so, you know, a few years ago, I started taking the steps to get certified to become a financial planner. I wanted to work with people one on one, I wanted to kind of help them in ways that a writer cannot. And in that process, I always expected to work with the self-employed, because that's what I knew. It's an area that I knew needed guidance, because I made so many mistakes in those years that I worked for myself. And you know, if I can help other people avoid those, that'd be great.

As I actually started reaching out to the self-employed a group that I found, not only did I really connect with, but that really was interested in hearing about some of the issues that I was bringing up and that operated very similar to the way I did other than the fact that they had more compliance to worry about was therapists, and those in therapy, private practice therapy practices. And so it became just this sort of natural sort of shift. I suddenly found myself speaking to therapists and now about 90% of my clients are private practice therapists.

PATRICK CASALE: I love that. And I think that speaks to so many people who are entrepreneurs, who are small business owners, who are therapists, who have gone through similar startup struggles, for sure, and tried to find their way to what felt the most energizing for them. I see it a lot where money and being a therapist don't always go hand in hand, they don't always see eye to eye. And there could be a lot of shame around this topic, because a lot of people listening are probably sitting there like, "I don't have anything in place." How often do you come into situations like that? And how normal is that for this population?

RYAN DEROUSSEAU: Oh, it's so common. I mean, you know, people always have this notion of, "Well, I should be saving for retirement." Or, "I should be investing in some way." But they have no idea how and the fact that they're ashamed by this is something that one is common, but also, it's really not their fault.

I mean, if you think about it, like did you ever take classes in personal finance growing up? When you were getting your letters for therapists did they ever teach you how to run a therapy practice or anything like that? This is just stuff that, yeah, we're not taught. Like, I've told this story to people, so they may have heard this. But like, my only time I was taught like, was in sixth grade when I had a class where we picked an individual stock and we wrote a check. And that was about it.

And the only reason I knew this stuff is because I went through it myself, and then I had a natural inclination to learn. And so, I did that. But expecting other people to do that on their own, it's a high bar. And so that's really where I come in to sort of help with that bar. But it's not also something they should be ashamed about.

I talk with clients or therapists at different stages of their career. So, some very early on in between, right? And some very far along. Those that are early on in particular are the ones where I see they've done, you know, very little to none. But they also have to remember that, like, they're also starting a business. Like they're not the entrepreneur in the mom's basement starting the business, but they're still starting a business. And the fact that they're not able to do everything yet is perfectly normal. And actually, right where you're supposed to be in that situation.

So, we need to start thinking about the future, and getting to the point where we're able to manage our cash flows, and manage for the future and that process. But, like, feeling like you're falling behind, because you're starting a business, you're not doing these other things. Well, that's part of starting a business. So, right where you should be.

PATRICK CASALE: I like that. And I think that helps with the normalization and the validation process of like, yeah, if you don't know this stuff, you don't know it. And if you're overwhelmed with small business startup, which a lot of you listening probably are at some point, or have been in that mindset, where it's like, "Oh, my God, I have to keep track of all of these moving pieces. How am I also supposed to keep track of like planning for retirement and future planning? Because I can hardly, like, think about anything besides what's happening today or this week. And I'm struggling to get clients and I'm fearful of is this going to be successful?"

Can you give us some simple, like, strategies and tips for those, whether they're at the beginning of this path or the end? Especially, if they don't have anything in place so that they can start moving towards at least feeling like I'm creating some security for myself. I'm creating some safety net for myself.

RYAN DEROUSSEAU: Yeah, absolutely. The first thing I would say is, you know, I bet many of you all when you're talking to clients, and they're stressed out or whatever, you're often talking to them about taking time, taking time for mental recharge, taking time to focus on family, or whatever. One thing I would encourage you, if you're sort of worried about this is taking some time to focus on the finances. So, by taking a few moments every week or month to actually look at this stuff, figure out a plan for it, you can actually make a lot of changes to where you're moving in the right direction without it becoming something that becomes overwhelming, where it's no longer about taking time on your own hands, it's being taken for you. And so finding some slots for that.

And honestly, that's where like my clients find some benefit from me is because I'm forcing them to take time every quarter, when I'm meeting with them typically. Whereas they might not do that themselves. So, that's the first thing I would say.

The second thing is you really need to evaluate sort of the business and the personal. A lot of times when we're looking at our business, we want to completely, like, shelter it from the personal side. You know, everyone tells you to get an LLC or an S-corp. And you know, you have your business expenses, your business credit card, and that's separate from your personal. And that's all well and good from a tax and legal purpose. But you can't ignore the fact that like, if you need a new roof, it's going to impact how you feel about your business. And if your business feels a little tight at some point, it's going to impact how you feel about your personal well-being and expenses and whatnot. And you cannot ignore that fact.

And so one way to protect is sort of first build that emergency fund so you now have shelter in place, both business and personal in place. So, you're not just like, kind of fly by night concerned about sort of what's going on and kind of stuck in your own head about fears, because we want to get away from that sort of fear-based business approach.

And then the third is really start to look at a solo 401(k) for most private practitioners. You know, there's always a debate between the solo and what's called a SEP-IRA. I typically guide people to the solo 401(k), because, yeah, of the amount that you can eventually put into it, it's very easy to set up now, that sort of thing.

But the more you're able to put that in now, one, you're saving for the future, you're now building an income stream for the future, so you basically have this passive income stream that you just don't touch, that's going to make you feel a lot better about yourself. And you're also reducing your taxes in the process. And so now you're creating some short-term savings as well.

PATRICK CASALE: Yeah, I love that. And that's very simple and straightforward. And I agree, like, just taking some time. And I love the fact that if you hire someone like yourself, it's almost like an accountability measure, right? Because if I'm left to my own devices, what's the likelihood I'm actually going to, like, spend a couple hours a month thinking about this? It's probably unlikely, especially, if it's a topic that intimidates me or overwhelms me. So, having that sort of teamwork, and support in place is really important. Then having an understanding of like, just getting started. So often, I hear like, "I don't make enough money to invest, I don't make enough money to put aside, it's really hard for me to, you know, relinquish this, what if I need it?"

In reality, I like to tell people like, hell, even if you put a recurring investment of like $50 a week, starting out something small, something that may feel like it's not that substantial, it is literally the mindset piece, the psychological component of like, just starting the process, because it's so easy until you do that to be in that inaction or that frozen mode where it's like, "I can't get started, because I don't know how."

RYAN DEROUSSEAU: Mm-hmm (affirmative). And that's a such a good point. That $50 notion, people kind of ignore that, because when you're like reading an article about these things, when you're reading the article they're going to say, you can put up to $6,500 in an IRA, or you can put 22,500 into a 401(k) because that's the most that you can do. But that doesn't mean that you can't gain value by putting $50 in and getting started. Most 401(k)s, and most funds have such low entry points now that even $25 can be the minimum deposit. And sure, this year, maybe you put $25 a month in, and that's all you can save this year. That doesn't mean next year that's all you're putting in, but at least you've like started sort of that train. Yeah, so that's a really great point.

PATRICK CASALE: Yeah, it's not even just starting the train, right? So to speak, it's also like prepping yourself mentally, and also getting you to probably hire someone who's going to handle your investments, right? So, that's another layer of accountability. So, unlike yourself, someone else out there who does this for a living so that it doesn't feel so intimidating where you're like, "I don't know what to invest in. Like, I don't know where to allocate this money." And it's like, well, you don't have to.

And when you're starting a private practice or any business, you need a team, you need a, "Like boardroom." Right? So, like, that means you should have a CPA, that means you should have someone who handles your money. Like, you should not have to do every single thing on your own, because you most likely do not know how, and the more we try to do on our own, the more likely it is we do none of it because it becomes so overwhelming that it's just a lot easier to just be like, "I'm going to bury my head in the sand and I'm going to just think about this next year."

RYAN DEROUSSEAU: Yeah. And that notion of just sort of burying your head in the sand, that only gets worse as you get further along, because the more you bury in the sand, the more it gets worse, the more you're embarrassed by it, the less likely you're reaching out until there's like a breaking point.

And that's really what, like, the financial planner placed in this. Like, I'm what's called a fee-only planner. So, that means that I only accept fees for my clients, I don't get paid by insurance firms or mutual fund companies to put my clients in certain things or anything like that. But where my place is, is certainly, it's described as sort of like the quarterback, and we're sort of working with all the financial team members or players of, you know, someone's financial life. So, we're working with the CPA, to sort of figure out the proper tax strategies.

You know, we do investments. Like, that's one thing that my firm does, but we can also work with and basically, look at what the investment manager is doing to make sure they're not, like, fleecing you and fees and bad products and stuff like that. So, that's really sort of our place in this but we're also sort of taking the opportunity to look for so what's the impact of all these things?

So, you want to add a person to your group practice? Well, these are sorts of the tax impacts of it today, but this is also the long-term impact. This is the breakeven point, that sort of thing. And so we can evaluate that assumption using math, which, you know, that can scare a lot of people. But we're not scared of that. And so we're able to provide some guidance and support in that way because of it.

PATRICK CASALE: I love the way you frame that. And I think that's so important to look at it that way. And I think a lot of therapists, you know, get kind of concerned like, how do I even know who to hire? How do I know what questions to ask? Because, again, coming back to the like, what you don't know you don't know. And two, all the horror stories of like, "I hired this person and they mismanaged my money and now all this stuff has happened." And that can happen in any industry. So, let's just like not make that the norm in terms of like what to expect.

But I would love for you to talk about like, questions that people can ask when they're looking to hire someone, but also I want to circle back to the quarterback analogy. I know you're in New York. So, like, are you talking like Tommy DeVito? Are you talking to Zach Wilson quarterback strategy? Are we like hoping for better outcomes?

RYAN DEROUSSEAU: I hope not. My goodness, got to be better than that.

PATRICK CASALE: It's got to be better than that.

RYAN DEROUSSEAU: Yeah, no-

PATRICK CASALE: Question that people can ask-

RYAN DEROUSSEAU: [CROSSTALK 00:18:08] you know, is star quarterback. But now the questions to ask, one, ask about that's the only aspect. That is very key. You want to make sure that whoever's helping you, their financial priorities are in place to help you.

Like, the reason I do what I do now, like a big reason I do what I do is because my father-in-law, he went to an advisor, he had an advisor for 20-some-odd years, family friend, sent my wife and I, I was dating her at the time, but sent my wife and I to him. And he took us out, wined and dined us. And we were like, "How is he getting paid? We have no idea how he's getting paid."

I just happened to like, one of my first jobs was covering financial advisors. And I learned about the payment strategies of advisors. And I learned how he was getting paid. Basically, he was putting us in mutual funds that made absolutely no sense for us. He was taking a cut of every amount that we put in there. And we're getting nothing from it because the way he was getting paid, he was getting paid more by the mutual fund companies than it was by us. And when I discovered that we immediately pulled our money out. Eventually, my father-in-law did too. But that set my father-in-law back.

And so I take it very personally on that front. So, definitely ask how they're getting paid. That is like number one. When you're hiring, say like a CPA, you need to ask, like, what type of planning is involved here? Because CPAs, they're great at filing taxes and that is what their business model is. Come tax time, they file, you know, 200, 400, 600 taxes all at once.

And they're just trying to get through. So, they're not looking at your tax situation and be like, "Oh, well, you know, you could have saved like $200 more here by just doing this." Or, "Hey, if you put this much in a 401…" They may do that, but they're not really doing that. If you're working with the CPAs doing tax planning, or kind of doing what we're doing, which is financial planning, they're looking at the full year picture, as well as the future picture, not just that year. So, also look for that.

And then, in terms of… I'm trying to think of another question. Hopefully, that kind of covers that. That is a good starting point.

PATRICK CASALE: Yeah, it's a great starting point so that people know when they make a call. Hey, here are some questions that you can ask immediately to just gauge your comfort level. I think that's really important.

I think responsivity is important, like having someone who's going to communicate with you throughout the year, when you have questions, someone who's going to have, like you mentioned, quarterly meetings, or some sort of situation where you all have some touch points, where it doesn't just feel like, "Okay, I've created this recurring investment and I'm on my own. Like, I don't know where the money's going, I don't know what's happening with it. And I'm kind of just lost. I see a dashboard. And that's kind of it." So, I think having that team strategy mentality is really important. That makes it a win-win for everyone involved. Now-

RYAN DEROUSSEAU: Yeah. Oh, sorry.

PATRICK CASALE: Go ahead.

RYAN DEROUSSEAU: No.

PATRICK CASALE: Go ahead.

RYAN DEROUSSEAU: No, I was going to say and one thing I would also add to that is, like, have someone who can explain this stuff to you. Like, you know, part of the reason I do what I do is because I'm a good communicator, and that's where the financial planner really fits in this is I can explain to people exactly the benefit of an S-Corp to an LLC in a very easy way that they can understand. But a CPA might not be able to do that. They just don't talk to as many people. I have clients who work with other investment managers who the reason they came to me is because their investment manager could not explain to them what they were doing from an investment standpoint and I can. I can show them what they're doing, and maybe ways they could be doing it better.

But like, you should always expect that in a service, especially, like if you're hiring an investment manager, they're taking 1% of whatever you're investing typically. And so, if let's say you have a million dollars that's $10,000 a year. Like, you should expect to be able to talk to your investment manager. And even if it's 5000, even if it's $2,500 a year, like you should still expect to be able to talk to your investment manager and know what they're doing with your money.

PATRICK CASALE: Yeah, I love that. That's really well said. And I think that helps break down some of the stress is the ability to communicate clearly and understand what's being said instead of like, I know when my friend who's my accountant, who my CPA talks to me about certain tax strategies my eyes glaze over, because he's wonderful as a CPA, but like you said, doesn't talk to many people, and he's speaking in numbers most of the time. So, I'm like, "I trust you, just do what you need to do." But you know, not a great strategy if you do not know the person, if you do not trust the person, probably not a great strategy, in general, anyway.

But so let's talk a little bit about retirement. Like, that word, I think, scares a lot of people in our industry, because what I hear so often is like, "I'm going to have to work until the day I die. Like, I'm never going to be able to stop. And I don't really see a way out of that from being in my situation."

RYAN DEROUSSEAU: Yeah, actually, I hear two things. One is that and then two is I don't want to stop working. And I always am of the opinion that you should be able to work as long as you want, but you don't want to be in a situation where you're forced to work as long as you want, because those are two very different situations, scenarios, and experiences. And when you're 70 and coming off of a health crisis, if you are forced to work an eight-hour work week, like that could be really tough. And so getting away from that is going to be key.

You know the one thing I talked about already is sort of building that retirement account, because that's the passive income stream for the future, no matter what you sort of see for yourself from a practice standpoint.

The other thing I would say is often when people are investing in a private practice, what they're doing is building an income stream. And they're not necessarily building an asset. And especially, if you've never going to build a group practice out of that, or anything like that. And so when you're just building an income stream, you're always going to feel that pressure to work, because as soon as that work is off, it's off. It's gone. It's gone immediately.

And so you need to invest in one of three ways. One is retirement. So, investing in the markets, we've talked about that. The other two ways is investing in businesses or investing in real estate. So, we're rolling down the line. And investing in business can be building a group practice that you can eventually sell one day. Like, I've talked to, you know, therapists in their late 60s, early 70s, where if they could sell their practice for, say, $200,000, that's the difference between their very successful retirement and very tough retirement. But they're not in a position to sell, because they've never really taken that aggressiveness towards that.

But these are options that are available to you, as a private practice owner, especially, if you're earlier in your process, figuring out sort of where you want to invest, you know?

Another thing to think about is commercial real estate, because you're a therapist, and you often have office space. So, maybe that's another way to invest. It really depends on the person. There's so many ways, but you have to kind of move away from thinking just building an income stream is enough.

PATRICK CASALE: I absolutely love that you said that, because I think you're so right, that so many people think like it's got to be fee for service for the rest of my life. And there are so many ways to diversify their income, to make your business an asset, to set yourself up later down the line when you say, "I no longer want to do this anymore for whatever the reason is." Whether it's health-related, whether it's just energy-related, whether you just want to change career paths and trajectory. So, really protecting yourself by being proactive and starting now.

For everyone listening, again, I don't care what stage of your career you're in, I don't care how old you are, if you don't have anything set up or in place, it is time to get started. And again, circling back to what Ryan and I both said, it does not have to be a huge amount of money to get your retirement and investment account started. So, protect yourself, protect your energy, protect all of the work and the hard work that you've put into this career, because I hate to see it where you have so many people that are either leaving the field due to burnout or feeling like I just can't step away, because I don't have any other way to protect myself financially. So, lots of ways to do that.

And Ryan, thank you for all the valuable information today. How can people-

RYAN DEROUSSEAU: Thanks for having me.

PATRICK CASALE: Yeah, absolutely. How can anyone find you if they want to work with you? Can you work with people who are throughout the country? Because we have listeners everywhere? Yeah, answer some of that stuff for us.

RYAN DEROUSSEAU: Yeah, I could work with pretty much anyone in the country. There's like certain states that if I need to file a form to be registered, I would file the form. So, it's very simple. And so I work with people all over the country. And you can find me. And the group I work with is United Financial Planning Group, but I do some marketing through thinkingcapfinancial.com. And if you go to thinkingcapfinancial.com/checklist, sign up for my email there, you'll get a free checklist, and it's basically six things to think about as you're getting started or moving on to the next stage, kind of building the practice, things to put in place and think about.

PATRICK CASALE: Love it. And all of that information will be in the show notes as well so that you have easy access to Ryan's information, his contact, his checklist, and everything else that we talked about today. Thanks so much for making the time and coming on.

RYAN DEROUSSEAU: Absolutely. Thanks for having me.

PATRICK CASALE: And to everyone listening to the All Things Private Practice podcast, new episodes are out every single Saturday on all major platforms and YouTube. Like, download, subscribe, and share. Doubt yourself, do it anyway. See you next week.