202: Exit Strategy: Freedom for Business Owners
LISTEN AND SUBSCRIBE
Apple Podcasts | Google Play | Stitcher | Spotify
Merry Christmas and welcome back to another episode of The Richer Geek Podcast! Today, we have a special guest, Joseph LoPresti, a seasoned founder of Arlington Wealth Management with over 39 years of experience in the financial services industry. Joseph is passionate about helping business owners achieve financial security and prosperity. In this episode, Joseph shares his insights on the unique challenges business owners face when it comes to financial planning. He discusses the importance of having a personal CFO, creating a proactive planning team, and leveraging virtual family offices for expert advice. Joseph also talks about his co-authored book, "Exit by Design," which provides a roadmap for business owners to design their ideal exit strategy.
In this episode, we’re discussing:
The Importance of a Personal CFO: Business owners need a dedicated financial strategist to coordinate their personal and business finances, identify overlooked opportunities, and guide them towards their financial goals.
Proactive Exit Planning: Don't wait until the last minute to plan your business exit. Develop a comprehensive exit strategy early on, considering your personal goals, desired lifestyle, and potential transition options.
Leveraging a Virtual Family Office: Gain access to a team of specialized advisors, including tax experts, wealth managers, and legal professionals, without the high cost of a traditional family office.
Achieving Financial Freedom: Define your "freedom point" – the point at which you have accumulated enough wealth to live your ideal life without financial constraints.
Resources from Joseph
LinkedIn | Arlington Wealth Management | "Exit by Design”
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler
Hey everybody, welcome back to another episode of The Richer Geek Podcast. Today we have Joseph LoPresti. He's a seasoned founder of Arlington Wealth Management, 39 years in the financial services industry and a history spanning more than two decades at the helm of his firm, his career shaped by critical view of Wall Street sales dominated culture. Imagine that he forged a new path that led him to develop a proprietary investment methodology, his deep conviction that hard-earned wealth should be actively safeguarded. I agree it's become the cornerstone of a unique client relationship centered around achieving security and prosperity, peace of mind. Joseph, how are you doing?
Joseph LoPresti
I'm doing well. How are you, Michael?
Mike Stohler
Good. I always start, give me a little bit about your background. What made you get into founding Arlington Wealth Management. How did you kind of rise through the ranks to start your own thing?
Joseph LoPresti
Yeah, sure. As you mentioned in my intro, that Wall Street culture really didn't resonate with me. I've been in the industry for 39 years, so I've been at the helm of Arlington Wealth Management, a company that I founded 25 years ago. I fairly quickly in my early in my career, I would say, gravitated toward wanting to do my own thing, carve my own path, and not necessarily be tied down to the sales culture that permeates a lot of Wall Street, I found so I'm a founder of Arlington Wealth Management, fortunate enough to also have my daughter as employee at this point, and could be a natural succession for me, along with some others as well that are involved in our firm, having that founding experience and being a business owner and entrepreneur, I've gravitated more towards working with other entrepreneurs and helping them coordinate their personal wealth planning with their business strategy and making sure it all is fitting together to really live the life that they want to live.
Mike Stohler
So, talking about this, we've had several wealth management guys. It's a very broad spectrum of helping people out. It sounds like you lean more towards a business owner, instead of just maybe a wealthy CEO or someone that is a VP of something, you kind of focus on a business owner.
Joseph LoPresti
Yeah, that's the niche that we've been focusing on now for some time. We do have other clients that are not business owners from more of our legacy clients, but there's 4,000 independent wealth management firms like mine in the country. So what we really find is there aren't great choices for business owners that are wealth managers that really understand the unique needs and concerns that business owners have. So that's why we think there's a big void there in the advice that business owners get from financial advisors or wealth managers.
Mike Stohler
Yeah, I agree. I'm a business owner myself and have been so for 27 years, and it wasn't until recently, it's like, "Oh, I finally got a CFO." They do the CPA, they do the management. I can't do anything without them telling me that I'm allowed to. But it was just amazing. And maybe you can expand on this as I was like, going, Well, I'm Why didn't I start my own Keogh or IRA? I thought you had to be an employee to start some of these things. I just kind of took owner draws and put them in the bank and maybe was a limited partner in some things. But talk to us a little bit about what are some of the things that if you're a business person out there, what can we do? What are some of the things that you recommend?
Joseph LoPresti
Yeah, boy, that's wide open. So one of the great things about being a business owner is the tax code is very favorable for the formation of small businesses and the owners, because of course, we employ a lot of people, and it's in the government's interest that small businesses could thrive. There's just so many different opportunities and I find it really matters what's important to the owner in terms of what they are trying to achieve with their life, what are their essential life goals? And then, how could we use the tax code and the opportunities that the government gives you to be able to, you know, really benefit from that and optimize your personal wealth. So of course, the retirement plans that you brought up are probably one of the more commonly used ways to accumulate wealth from a tax efficiency standpoint. But there are a number of other ways as well. Of course, depending on. In business the industry, what stage of career the owners are in? Or if they're more in the growth stage and building, or if they're more in maybe thinking about the sunset stage and getting to that, thinking about what their end game is going to look like. Then, of course, there are a lot of different opportunities depending on those situations.
Mike Stohler
So if we're trying to monetize our business value, maximize my personal wealth, what are some of the things I should be thinking about? It's like, "Okay, look, of course, I want to maximize my personal wealth, but I want to also monetize my business value." What are some of the things that you're telling your entrepreneurs, how can we juggle both sides of that?
Joseph LoPresti
Yeah, there's a few things. One is we like to help a business owner develop a personal action plan, which is really thinking about what their end game is going to look like, and having it thought out, looking at who they ultimately would want to transition the business to? Is it a sale? Is it an internal transition or a family succession? Who would the ideal buyer be in their mind? Will they have a role in the company after the sale, and if so, how long and how much do you know? How do you want the employees to be treated? What does your life look like? All those sorts of things that if you think that through ahead of time, then you could design the exit on your terms. If you don't have that thought through, then you're just kind of going about it haphazardly, and you get what the market offers at that point. So I think that's important from a personal standpoint. We really advocate for the business owner. So you mentioned a CFO earlier. We hold ourselves out as being the personal CFO for the business owner that really coordinates everything about their needs and their dreams, their their goals and what they're trying to achieve, and then then develop plans around that from a business standpoint, as well as personal wealth planning and advanced tax reduction, enters a lot into that. For each of our clients, we like to think about what we call the freedom point. For everybody to know what their freedom is, and that's when they've accumulated enough wealth to do whatever they want, whenever they want, within, of course, the bounds of reason, but when they could really live their ideal life without worrying about money and financial constraints. And that extends well beyond just the financial aspect. It's being able to spend the time how they want to spend time, whether it's working in the business or not, the freedom of relationships, who they're spending their time with, what types of clients and or personal relationships. So all of those things I think are important, and what I find is just very surprising, as most business owners have no clue of what their freedom is.
Mike Stohler
We're too busy working, you know? I mean, just day to day, we have the blinders on, right? It's like, I can't even think about that right now. And what you're saying is we need to start thinking about that pretty early, right? So that we go on the right path.
Joseph LoPresti
Yeah, it's good to know. I find a lot of times business owners are at their freedom point because we'll put together a detailed, like lifetime cash flow plan for them, and it'll look at everything, what they need to do, everything that they want in life, what the tax liability is likely to be from there. We could then, of course, plan ways to make improvements, but it just helps them understand, if you know, if they're at their freedom point, or if they're not, what do they have to build the value of their business up to to get to their freedom point? And of course, you make decisions much differently whether you're at your freedom point or if you need to grow more to get to your freedom point.
Mike Stohler
And that is the importance you know that I've also learned of having you know what you're saying, a personal CFO, or even fractional CFO, or whatever it is, that guy that is more than a CPA, more than an advisor. It's someone that meets with you on a regular basis, right? And says, "Look, you need to do this. You need to do this. We're looking at this." You need to, it's like, they told me, I need to create my own foundation. It's like, "Yeah, I give a lot to the chair and I do these things and to do this." And they said, "Well, you know what? We're going to have a foundation to help you with that. Is that some of the things that you guys do, and what's the importance of having that? You talked a little bit about the personal CFO, but to kind of dig in a little bit just how much help a personal or fractional CFO can give you?
Joseph LoPresti
Yeah, so the CFO is going to be the person who you're working the closest with. So you have advisors, right? You have a CPA, you may have a financial advisor, attorneys, business consultants, whoever it is that. If you're working with them, they're really giving you what I call more isolated or siloed advice. The accountant talks about accounting, and the financial advisor finances and the personal CFO is going to coordinate all that into a unified a unified strategy, making sure that opportunities are being brought to your attention that you probably aren't even aware of today. That's important, because business owners, they don't know what they don't know, sometimes they think they know everything, but maybe that's just for their business. They don't know what they're missing in their, you know, their personal finances or how to coordinate the business strategy with their personal finances. The personal CFO is going to make sure you're not missing something important in your own thinking, and really just be that guide you know that takes you from where you are today to ultimately, where you want to go and help you navigate down the right path.
Mike Stohler
Yeah, it is so important, and you hit it right on that. I know everything about the business and the business finances, but when it comes to my own stuff, you know, once it trickles down to me, it was just absolutely amazing. Ladies and gentlemen, if you are listening and you're a business owner, it changed my life, my family's life, having that CFO, because now it's like, "Okay, I'm getting ready to sell this. What should I do?" I don't have to sit there and say, "Well, I don't know." I mean, it just goes into the account or, they slap me upside the head and say, "Don't do that." Uncle Sam's gonna get too much. It was eye opening. But it's so nice to have that trust that you can bring to someone you know, and say, "How do I do this? "I'm thinking about doing this, you just have that expertise, right? It's absolutely wonderful.
Joseph LoPresti
I think a personal CFO is going to help educate you on your options, like, if you are in that stage of going through a sale, or beginning to prepare for a sale, they're going to educate you on, what are your options? What are things you're going to be dealing with? Because a lot of times it's the only sale you go through. I mean, there certainly are business owners that have sold more than one business and have gone through the experience, but the first time you go through it, there's just so much to it that there's no way that you're going to really be able to anticipate everything that you're going to deal with, but somebody who's gone through it with other business owners, I don't want to say, "Hold your hand, but can't hold your hand." And kind of like I said, "Be the guide to help you understand everything you're going to be dealing with and help you make smart decisions and not, you know, miss something that later you're going to regret, yeah,
Mike Stohler
And it's like they're saying, "Mike, why are you just taking all these, this owner draws in the salary, and you're not putting any pre-tax on how much money you've lost?" I'm like, "Oh no, because I don't have a clue. I don't know." So not only do they save you a lot of things, but they actually save you money. So it's really good. I appreciate what you guys do for businesses. At what point in the business life or the entrepreneur's life, do they need to start thinking about being a personal CFO, or start to really gather the monetary value of a worthy employee? Because I don't think you need that many employees. It's not that year people make tens of millions of dollars just because they invest. But at what point should I sit there and say, "You know what? I need to give Joe a call."
Joseph LoPresti
I think business owners should always start with at least an idea of what the end game ideally would look like, because there's just so many decisions you can make along the way. But the reality is, most business owners really start to give this serious thought. I tend to find when they're, say age 55, and up. Now think about when I say that, when I'm talking about our founding entrepreneurs, people that started a company, they founded it, they've been kind of building this baby for decades, and now they're getting to the point where they may never want to sell. They enjoy what they do a lot of times. And it's what they identify with, is their business that they built. But they know it's inevitable in one way or another. One thing you could count on is you're going to exit your business, you might as well plan that out, be proactive about it, and have it be on your terms, in your way. And that's the only way to do it without regrets later on.
Mike Stohler
It's kind of two-fold. I own hotels. You sell one hotel, and I'm like, "I don't want to make two and a half million on this or that." It's like, what I can send 1031 it or, what if I do or what happens if I take an owner? Can I do this? Can I do that? And they're like, "Do this, do that." And it really takes the planning on when I sell an asset away, because it's like, I let you handle it. They say, "Okay, you're going to do 1031. You're allowed to take this type of money out of these fees, and this is what you do with that money. You're going to put them in pre tax, this pre tax, I would have never done any of that. I've just gone out and stood in the bank.
Joseph LoPresti
Yeah, they're helping you optimize. And that's really what it's all about. You put a lot of hard work into that business. You don't want to make decisions that aren't going to be optimal and so and it's not always about just making optimal decisions, just making the ones that are right for you, and knowing what your options are so you can make informed decisions, right? Without having that CFO, you wouldn't even know about many of your options, right? That you add.
Mike Stohler
Absolutely and they've saved me so much money. They look at the taxes, they look at this, and I know you do that, and they say, "Mike, day 1, we can save you $80,000 a year because you're not doing this, this, this and this, and you're not taking these deductions, you're not doing all this sort of stuff." And I'm like, going, "Oh my God, where were you guys 15 years ago?" You know?
Joseph LoPresti
So back to that saying earlier, where most people, most business owners, don't think about that until they get a little bit later stage of the rare. Because not only they're building businesses, they have a family, and they're a young family, and they're busy with family life in a lot of cases, so they just, there's only so much they could juggle.
Mike Stohler
Yeah. Well, that's true. So let's talk about a little bit you talk about the proactive planning team. I haven't heard about what virtual family offices or a proactive planning team? Let's talk a little bit about that.
Joseph LoPresti
A proactive planning team is a team of advisors that you work closely with. Most times it's whether you have a CFO, or you have a financial advisor, or you have an accountant, it's really the advisors that you're talking to most frequently, and they form a team, and that team is there to guide you, help you make the right decisions. That really knows what you're after, what you're trying to accomplish, what are your essential life goals, and they're going to be able to, you know, guide you in the right direction. Now, in today's day and age, there's no one person, or even a couple of people, that could have all of the knowledge about financial opportunities, financial strategies. Think of it this way, the tax code is something like 175,000 pages. The best and brightest advisors, there's no way they know all of it. So we formed a virtual family office, which is a deep bench of specialists that we could bring in that have a deep amount of knowledge, let's say, an inch wide and a mile deep in a specific section of the tax code. So if we identify that this could be a potential solution for you, we could bring in an expert in that area of the tax code that could implement solutions for you, and our experts at implementation of strategies and significant tax benefits.
Mike Stohler
Wow, that's impressive. You hear that, ladies and gentlemen, let's focus on our business. And what I say is, as an entrepreneur, let's stick to our lane right, which is what we do in the business, and let all of you guys handle it. I hate accounting. I hate finance. You know that story so I'm more of an economic type thing. You guys do the credits and debits back a negative is a positive and just just to have a job at the end of the day. Let's just make everything opposite of what it should be. Joking aside, it is just absolutely fantastic to kind of explain that a little bit further.
Joseph LoPresti
Think about ultra wealthy families, let's say somebody sells a business for hundreds of millions of dollars or billions of dollars, they tend to have their own family office, their own team advisors that work just for that family, and handle all of their their finances, their accountant, their real estate, their insurance, etc. But it's very expensive to have all of those people on staff. So a virtual family office is kind of like a fractional family office where we have over 80 different professionals and specialists in different areas. It's taxes, it's wealth management, it's risk mitigation, it's legal services, and it's business advisory services. And so these are people that are available for all of our clients, and clients of other advisors that are part of this program, this virtual family office, that we could bring in kind of on, let's call it a plug and play type of relationship. So it's affordable for our clients, but they're still getting that family office experience without the expense of having their own family office.
Mike Stohler
Oh, that's fantastic, yeah. I figured it's like, "Yeah, well, I'm not a billionaire." I'll never have a family office. It's actually really cool, because it allows people that are getting there, not quite there to have availability of those experts, and I think that's really good. Before we leave, let's talk about your book, Exit By Design. Let's discuss that a little bit.
Joseph LoPresti
Yeah. So Exit By Design is a book that I co-authored with my daughter, Marissa. It really was written because we believe there's a void in the level of advice that business owners are receiving, particularly from financial advice and advanced planning, as we talked about earlier, business owners tend to work with several different advisors, but each one has their own silo that they're experts in and what they really need is coordination of all of that advice and have it be optimized around their needs and their goals. So there's a unified strategy, and it's all working for them and what they want to achieve in life.
Mike Stohler
And everybody, i's Arlington Wealth Management. Joseph LoPresti. The book is Exit By Design. Joe, where can people find you?
Joseph LoPresti
Yeah, and there's a website for the book too. So any listener can go to exitbydesign.com, and they could download an ebook version or an audio version. If they want, for free, they could connect with me there if they want to. And of course, our company website is arlington-wealth.com and they can connect with me there as well.
Mike Stohler
Fantastic. Joe, I appreciate you coming on The Richer Geek Podcast. Have a wonderful evening.
Joseph LoPresti
You as well, Michael. Thanks.
The information, statements, comments, views, and opinions (collectively, “Information”) provided in this podcast are not intended to be and should not be construed as financial, economic, legal, accounting, tax or other advice. For our full disclosure, click here.
ABOUT JOSEPH LOPRESTI
Joseph F. LoPresti is the seasoned founder of Arlington Wealth Management, with 39 years in the financial services industry and a history spanning more than two decades at the helm of his firm. Joe’s journey into finance is deeply rooted in his family’s legacy of perseverance and success. Married for 33 years, Joe is a proud father of three daughters who share his enthusiasm for life and the wine-making tradition inherited from their ancestors.
Shaped by a critical view of Wall Street’s sales-dominated culture, his career forged a new path. This path led him to develop a proprietary investment methodology. His deep conviction that hard-earned wealth should be actively safeguarded has become the cornerstone of his unique client relationships. These relationships are centered around achieving security, prosperity, and peace of mind.
Joe’s passion for financial literacy inspires his multifaceted contributions to investor education. These contributions include radio segments, course teachings at local colleges, and the foundation of the Investor Education Institute (IEI).