The Different Facets of Wealth Management With Michael Soroko & Zach Zenda

March 17, 2022

Expert CRE Secrets Podcast

“Everybody right now is just trying to get rich quick and I think there's a lot of people that have gotten rich quick but the majority of the people in this country are not getting rich quick by hitting a couple of nice trades in the market.”

Michael grew up in Kinnelon, NJ. Mike attended Rider University in Lawrenceville, NJ where he was the Captain of the Cross Country and Track and Field Teams. After graduating from Rider University with his Bachelor’s in Finance and M.B.A. in Entrepreneurship, Mike entered the Financial Services Industry in 2013. Mike is one of the founding partners of Emeritus Wealth and holds his Life, Health, Series 6, Series 63, and Series 65 Licenses. He obtained his "Certified Family Business Specialist “designation (CFBS) through the American College in Philadelphia in 2015.

Michael has developed a unique ability to work directly with close-knit family businesses to help them become aware of financial strategies that will be instrumental in their success. Mike has spearheaded the charge in bringing financial awareness to the students, faculty, and alumni within the Rider University community by working closely with the athletic department and alumni association. Mike currently resides in Morristown with his wife Nicole and their dog Hannah.

Zach was born and raised in South Brunswick, NJ. Zach attended Rutgers University in New Brunswick, NJ where he was a member of the Men’s Lacrosse Team. He graduated with his Bachelor’s Degree in 2012 and began his career in the Financial Services Industry. Zach has been a registered representative of MML Investors Services, LLC. since 2013, and is one of the founding partners of Emeritus Wealth. Zach holds his Life, Health, Series 7, and Series 66 licenses, and he obtained his "Certified Family Business Specialist” designation (CFBS) through the American College in Philadelphia in the summer of 2015. grew up in Kinnelon, NJ. Mike attended Rider University in Lawrenceville, NJ where he was the Captain of the Cross Country and Track and Field Teams. After graduating from Rider University with his Bachelor’s in Finance and M.B.A. in Entrepreneurship, Mike entered the Financial Services Industry in 2013. Mike is one of the founding partners of Emeritus Wealth and holds his Life, Health, Series 6, Series 63, and Series 65 Licenses. He obtained his "Certified Family Business Specialist “designation (CFBS) through the American College in Philadelphia in 2015.

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The Different Facets of Wealth Management

With Michael Soroko & Zach Zenda

Brett:

I’m excited about our next two guests that are out of the great state of New Jersey, Michael Soroko, and Zach Zenda. They’re on a mission to help people have total financial analysis on all of what they’re doing to build their wealth, including retirement analysis, including estate strategies, including employee benefit and retention services, business continuation strategies, trust services, life insurance, and so much more. Please, welcome to the show with me, Mr. Michael Soroko, and Zach Zenda. How are you are guys doing?

Michael:

Good. Thanks so much for having us, Brett.

Brett:

I’m excited to have you guys as well. How about we start with Mike, and then we’ll go Zach, a little bit more about your story and your current focus?

Michael:

I’ve been in the business here in financial planning since 2013. Zach and I partnered up pretty much six months to a year into the business to young guys who didn’t really know too much about where we were going just said, Hey, we want to work hard and help a lot of people, and eight, nine years later, here we are with a team of staff and managing assets, helping people every day. Born and raised in New Jersey, and love the business and everything about it.

Brett:

How about you Zach?

Zach:

Similar to Mike started in the business in 2012, and Mike and I started working together pretty quickly. Fast forward almost a decade later working together and grown to probably well over 600 households and clients, over $100 million in assets, and really looking forward to the next 10 years or so of a lot of the changes that we’re going to be seeing across the board in this country. We’re already seeing it so quickly. But like Mike born and raised in New Jersey, we’re both college athletes so that similar backgrounds, totally different sports, but similar backgrounds and our work ethic and drive, and what motivates us definitely brought us together and continues to help us exceed and grow and build the business well after our, our athletic careers have long passed us. Excited to be here today, and looking forward to chatting with you, Brett.

Brett:

Thanks so much for that background. That’s really cool. Let’s dive right into the number one Secret to Building Different Facets of Wealth Management. What would you say that is. What’s the number one secret to creating different facets to make sure that you’re financially strong and stable?

Zach:

I think the first thing that you need to know is you need to have a plan. I think so many people especially in today’s, stock market with what we call the meme stocks, the gamification of the stock market, you’ve got Robin Hood, you’ve got cryptocurrencies, everybody right now is just trying to get rich quick and I think there’s a lot of people that have gotten rich quick but the majority of the people in this country are not getting rich quick by hitting a couple of nice trades in the market. I think the first and foremost is is having a game plan and understanding that it is a long term plan and it’s not just a six month or 12 months turn your $500,000 into 5 million it’s just really not the reality for most people so

Brett:

Zach anything to add to that?

Michael:

I think he hit on the head and then with the game plan comes a financial coach? Whether it’s a coach and accountability partner, someone like us that’s licensed and in the business someone like yourself we know your background, someone that could be your spouse or your parent’s aunts, uncles, somebody that at times that you might not want to think about your money, the markets, taxes, etc. You have somebody that can keep you accountable and just say, are you on track with your goals? Are your goals in line with your money and these types of things?

Brett:

As a partnership, I’m really curious about you guys. I imagine you guys have to complement gifts and strengths? Maybe different personality types. Maybe the same. I don’t know. I met you guys five minutes ago. Talk to us about the partnership? Why partner? How do you guys his gifts and talents complement one another?

Michael:

Started seven, eight years ago, Zach had been in the business and kind of as two young guys saying most of our friends and people in our natural markets didn’t have a whole high Have a lot of money. We had to level up and just go out and try to help a lot of people, and we said, it’s a lonely, lonely business by yourself. We’ve done everything from networking events, business card exchanges, cold calls, marketing, branding, and to do that yourself on some of those early mornings, late nights can be challenging. We were kind of like Zach and said, both college athletes came up and said if we’re going to go at this thing and survive it’s the very small success rate in the financial advising financial planning business, let’s go at it together, and actually, the other thing that brought us together was sharing staff and the beginning, you got to hire an assistant, you got to hire a staff, he can’t be wasting your time doing paperwork, and service items. He said, why I can’t really afford my own staff full time, he can’t really afford it. We came together split, and since then we have some more staff and other team members, but it was kind of we always say it every day as a joke was that how did we do it? How do we survive? How do we have all these clients and assets and getting referred, etc? It’s been a long journey. But sometimes our clients and we think we’ve been in the business for 30 years, I’m like, we’re only been an eight, nine years.

Brett:

Out of that Michael had, or is that?

Zach:

I think part of your question is what differences do we have? I think Mike and I are very similar, we’re very different at the same time, and Mike strengths are the organization behind the business and making sure that everything is run as smoothly as possible with our clients and, and how important it is from point A to point B with bringing on new clients and having all the systems and processes and, and then also Mike’s personality with clients and getting referred and similar to me is coming up with these ideas and marketing and going out there and continue to build our brand, and bringing that all together has allowed us to continue to go into this hyper-growth mode, which we’re looking forward to over the next decade or so from here now. Because, I feel like we’re just scratching the surface, like you just said, I feel like we’ve been doing this for 30 years. We’ve been just under 10 years, and I think the next 10 years from now, for us are just such a big run-up here for the next 10 years to continue to grow. I think I listen to one of your podcasts and you’re talking about the big wealth transfer from the baby boomer generation that’s coming and we’re starting to see that come now. We’ve already had experiences with that with some of our bigger clients now having some massive wealth transfers, and that’s only going to continue to happen, and I think we’ve positioned ourselves in such a great spot now to be able to help this transition of wealth in our country, which we’ve never seen before.

The Different Facets of Wealth Management: “What we call real estate – the solid ground to build a house on – is the broad foundation on which nearly all the guilt of this world rests.” – Nathaniel Hawthorne

Brett:

Thank you so much. By the way, you can learn more about Michael Soroko and Zach Zenda. You guys have some really cool last names by the way, and EmeritusWealthGroup.com as silicone, by the way, E, M, E, R, I, T, U, S, Wealth Group, Emeritus wealth group.com. What services do you guys offer? Just so I understand you guys are doing? Are you financial advisors, insurance professionals a mix? Can you kind of just break it down? What is it that you guys offer your clients?

Michael:

It's a wide range, I would say, we first started, we really only were in the insurance side of the business, then we grew more wealth management, financial advising, retirement planning, education planning, we do a lot of work in our markets with student loans and debt. We do a lot of work on the business owner’s side as well. Group benefits, qualified retirement plans, different custom plans, employee retention strategies, again, we've worked with a lot of CPAs, and I would say centers of influence and partners to help, the best resources around the client. But at the end of the day, it's really just building relationships and helping people with wherever they are today, where they want to get to in the future, and how can we help them understand things on a baseline level financially, to get there a little bit quicker, and maybe a little bit more efficiently than they can do on their own?

Brett:

Let's talk about real estate versus maybe traditional, more traditional liquid securities investments. I'm curious if you guys invest in real estate yourselves, as my background for most of my clients, and the people that I serve come from entrepreneurial businesses, real estate, mostly where they've made up the majority of their wealth. I'm curious about your guys’ clients’ same different or what's kind of the nuance there to help people who are moving from real estate and wanting to maybe be a little more passive and work with you guys?

Zach:

Mike and I both have real estate that we currently own and our client base does, there's a good portion that does invest in real estate. It's not a ton, to be honest. We're not as heavily based in the real estate market as you are with you and your clients there. But I certainly think that more and more people are looking for alternative assets, especially the ones that we're working with, is they want to have other income coming from Real Estate income, they don't want to just have all their money sitting in the stock market or all their money in the bank, obviously earning them minimal interest at this point. But it's a little bit of both of our clientele.

Michael:

I hit on that. I think it's not the predominant thing that we work with. But we both own residence, I just bought a rental property. Up in Vermont, we joke living in New Jersey, the man, we have these clients now through the pandemic, and zoom and clients throughout the country, we keep getting licensed and how much money you make and where you saving money, and tell me about your properties, and I own this property at 6000 square feet for 300 grand and I'm like, that property in New Jersey is going to cost you 1.7 million. But again, it's all relative, I think we're really we are big fans of real estate as one specific asset class. I think kind of the old cliche, don't put all your eggs in one basket, we meet people that say, crypto is the only way or stocks are the only way your mutual funds or index funds or real estate, I think we could get to over-leveraged in any one area. It's not going to do too well. It's about having balanced and we try to add that into each client's specific plan.

Brett:

The diversification liquidity and the ability to have time to go in and out of the real estate. That's what we focused on, and in the meantime, you'd be able to go on the stock market, right and buy some insurance and do that all tax-deferred, which is gonna lead to our next segment, which is the biggest frustration for yourself, clients, friends, family, when it goes to selling highly appreciated assets via cryptocurrency, real estate, the primary home of business, and having to face huge Capital Gains Taxes. You're in Jersey and New York, California are some of the highest in the Union here, but can be 30 to 50% of Capital Gains Tax and Depreciation Recapture that's going to be paid to the government unless you have some kind of deferral plan. I'm curious guys, what's the biggest frustration that you've seen with Capital Gains Tax Deferral Options and or the 1031 Exchange?

Michael:

I think we're big fans of the show, also known that we were coming on here, we've been listening to a bunch of your shows leading up to this and we're getting takeaways to license great, we're going to share some of these things with, with our clients on things that we're not experts in everything real estate, obviously, but I think the biggest frustration is number one, people aren't educated. They say I can just go on Google and get the answer or do this or that or my exact always jokes, you say I'm having a conversation with his mailman, and he's like one of my mailman starting to tell me about like capital gains and stock trades, that there's just a different shift in the investment universe. I think a big frustration when it comes to our specific world is that most people are just putting all of their dollars in these qualified retirement accounts, and oh, I put my money in my 401k. Even if we put an example, for a business owner of ours, I'm gonna put in my Sep at 56,000, I'm gonna max out a 401k deferred comp, even if you put away 100 to $250,000, we always say, do you think taxes in the next 2030 years are going to be higher or lower.

Most people would agree they're probably going to be higher, if that's the case you want to be safe, saying, I'm gonna pay all that tax in the future, as great as tax deferral is, I think that's one and the other one in the Robin Hood world that we work in any kind of deal with and see people now investing, people made a lot of money very quickly, if we just go in the past 18 months from April 1, if you started investing through the pandemic, until now, people thought the stock market could only go up, and we kind of laugh. Like, obviously, that's not the case, and it's a lot of younger people, which we love that more and more people are into investing. But when you think about how you've got a 234 100 million of conscious $500,000 unrealized gains, and what are they doing to maybe realize they don't realize you're paying federal-state income, net investment tax all these things, and like you said, 30 to 50% is wiped out.

Zach:

Unfortunately, for a lot of our clients, especially those with highly appreciated stocks, or RS use, or just different portfolios, I mean, we're not dealing as much in the 1031 Exchange and things like that nature. But people aren't really especially those that have incomes north of 500,000 750 million dollars, plus they're in New Jersey, basically paying close to 50% in taxes on that money. They're all happy, we just sold a million dollars or $2 million worth of stock, but they're not realizing that they're only gonna get 48 to 50% of that money right now, and unfortunately, I don't know where we're going. There's obviously not you're talking politics, but it could be getting worse from here. That's another scary thing that we're starting to see for a lot of our clients, which is like Mike said, you're learning some interesting stuff from what you were talking about on your Podcast, definitely want to kind of start to talk about what other options are out there for these clients so that they're just not losing 50 60% right off the bat when they're selling these highly appreciated assets.

Brett:

It's no longer about cash flow. It's now about tax flow. I mean, you got to have cash flow, that's important. But for a lot of the clients that we serve, they've made their wealth. They've built their businesses, and they're ready to exit and they're ready to exit rich, and they're ready to exit in a smart way, and a lot of them will not exit if they don't have a clear plan to defer the capital gains tax, and back to the part of your point, we were saying earlier, you have the largest wealth transfer in history, the planets happening right now, and this is, according to the American Bankers Association Association has about 17 to $20 trillion that will pass for the baby boomers and the millennials in the next 20 years, and it's known as the largest wealth transfer history, the plan, it's never happened before there are 10,000 baby boomers turning 65 every day, and there's over 77 million in the US alone, that's the first storm, the Democratic Storm.

The second storm is the Political Storm and you touched a little bit on that but Biden is considering moving from 20 to 40% on the capital gains tax federal rate also eliminating or limiting the 1031 exchange and the biggest thing is eliminating potentially the stepped-up basis so essentially transferring the majority of the wealth from the baby boomers in the next 20 years should those things pass and also not have someone else come back in and reverse them there's never been more transfer from a single let's say citizen to a government that we know of in the history of the planet so it's a battle for tax flow, not just cash flow and this is why we offer the deferred sales trust if you are selling a highly appreciated asset you can defer the tax right and you can live off the cash flow and slowly pay some income tax on that but keep the golden goose the main principle in place and just continue to pass that on to your kids and keep it going for you which is great.

You can also delay the income tax so you can delay for a couple of years and that can also help you if you're moving out of New Jersey and establishing residency in Florida or it has zero income tax or in Nevada or different states that are more favorable so it can defer capital gains tax It can also be delay income tax and then it can also move funds outside of your taxable estate which is another big thing that most people may not be painted as much attention to but that's going to be able to save 40% so so much there you can go to CapitalGainsTaxSolutions.com to learn more it's capitalgainstaxsolutions.com, guys, that being said, we are running out of time are you ready for the lightning round?

Michael & Zach:

Yes.

Brett:

Knowing what you know now we'll start with Mike again. If you go back to your 20 to 25-year-old self what's the one Golden Nugget Make sure to tell yourself to do

Michael:

Related to this business it would have been hiring more people more staff and pay him more money and hire him at a quicker rate.

Brett:

Excellent. Love it. How about you Zach?

Zach:

I think the number one thing I would do is just reinvest more money back into the company and continue to understand what that ROI is on just more and more dollars going back in versus 25 putting it back into a lifestyle as you start to make a little bit of money.

Brett:

Invest in yourself. Invest in the business build systems build people love it. Second question, the number one book you recommended or gifted the most in the past year, Mike?

Michael:

Shifted a lot more to audiobooks with the drive in life. But I would say Think and Grow Rich. I love the fundamentals and all the things it's crazy to be still how many of our clients or friends I've heard of it, but still no haven't read it so easy. We use that a lot.

Brett:

Go ahead, Zach.

Zach:

Read this on the beach early on in the year in vacation but a The 10x by Grant Cardone not a huge Grant Cardone guy, but think there are little things that you can take from him, and I thought the book was just, which is awesome, and I probably had about maybe five or seven people in the last couple months here, read it and say the same thing. Just some great takeaways from the book. So beautiful.

Brett:

Next question, what are you most curious about Mike?

Michael:

Most curious about, honestly, where our team is going to be in the next five to 10 years where again, we started just with each other, and now as we hire more staff, we had a former colleague literally call us right before the podcast, hey, I want to come back. You guys hired more advisors, and we said at this point, we kind of want more staff to help us build and support the foundation. Every day things change. But I think we're going to be as a team in five to 10 years is the thing that I just stay up and think about Sure,

Zach:

I would say most curious about is, what does the country look like from a workforce and just life in general post-COVID and whatever that means. Are that 12 months, six months, two years, what is life look like? I don't think it will ever, ever be the same for better or worse in different ways, but very curious to see how we move on and how we continue to grow post-COVID.