Certified Financial Planner (CFP) Eric Gabor started out at large Wall Street investment bank right after the financial crisis – but it wasn't the right fit for him.
"I didn't like how we looked at clients as targets to sell products. I realized that there's another world where you can deliver great advice and get paid for that great advice, without having to hawk products," said Eric. "I feel much better every day than I did before, so that's important."
Now he's a fee-only advisor, meaning he doesn't take any commissions for his work. Clients pay him a monthly retainer model or assets under management charge.
On top of being a CFP, Eric is an Enrolled Agent (EA). That means he can also prepare his clients' taxes – a rare combination in the financial planning world. Eric has especially carved out a niche for women in New York City's tech scene.
"My wife is a tech employee, so I understand the tech culture and financial landscape especially in NYC. I [also] work with small business owners and a lot of single women. I think I have fourteen single clients that are women," he said. Eric also helps out families as well.
Below, our interview covers hands-on advice he gives people in the tech scene, some of the biggest financial mistakes people make, and how financial planning and taxes intersect.
What would you say are some of the most common financial mistakes people make, in general or in this niche especially?
Not saving enough for retirement at a young age, I think is really one that I catch very quickly. I work with a lot of people in their thirties. You still have some time to catch up on retirement savings when you're in your early thirties – you can pivot the course. I like to use that airplane analogy – you're flying from New York to LAX and there's a bad storm over the Rockies. You can reroute the plane to avoid the storm. When you're descending into LAX and there's a bird on the runway or something, there's not much you can do. You can pull up but you can't pivot the course too much.
"If I can help my clients align their money with their values and live a more fulfilling life, that's really what I want."
Not having emergency funds is also a huge issue, or only focusing on paying down student debt while neglecting to save for retirement. For families, not having a will or not having life insurance is really scary, something I see way too much of. Your kids are your most important asset, so you have to protect them with a will and the proper life insurance service.
If I were somebody in my mid twenties and worked in tech, but I wasn't sure how much of what percent of my money to put into a retirement account, do you have general advice for that or does it vary widely depending on income?
I usually make all my clients commit to at least saving at least 10% for their 401k, plus most companies usually have a 3% match. Most people need to be making, to afford my fee, around $140-$150K if they're single. So if you're doing a 10% on that, you're getting pretty close to me maxing it out.
Retirement for our generation may look a lot different than prior generations. I don't think our generation, especially Gen Y, really wants to sit on a beach in Boca Raton for 40 years. From my peers and my clients, that's just not what they're interested in.
People who have their own small business usually don't have the same 401(k) or matching. What advice would you give to them about retirement savings?
I recommend small business owners consider a Solo-401k. Although you won’t receive a match, the contribution limits are much higher since you can income a profit sharing piece. The maximum deferral for 2019 is $56,000 ($62,000 if over 50). This could be a powerful way to build your net worth, plan for your retirement, and reduce your tax burden.
You help people with their taxes and financial planning. How do those intersect and impact each other?
Yeah, usually when people say they have an accountant it’s someone they speak to once a year around March or April. They say, "Here's my stuff", and the accountant says, "This is what you owe, and this is what you're getting back." There's no advance planning attached to it, so being able to be forward thinking and plan proactively in advance of taxes is being due is a huge advantage for my clients. I'm talking to my clients at least six times a year, and meeting in person two to three times a year, so I'm constantly updated on what's going on in their life and able to plan for what their taxes will look like for the upcoming year.
"You only know as much as you know – you can't really cut your own hair. Often times, working with an expert will get you better results."
If they need a new bank account or they need to open a new brokerage account, or if they change jobs and they're missing one W2, I know about all that, so being able to spot things that are missing is really important. Like I have a client now, she's leaving a tech company for another tech company. We're trying to figure out [her stock options], whether it's buy, exercise, or hold to a cashless exercise. So we did a tax projection to figure out what the best option is and how that will affect her taxes.
What would you say to someone who is reluctant or skeptical about getting a financial planner or advisor?
You only know as much as you know – you can't really cut your own hair. Often times, working with an expert will get you better results. Or maybe your time is more valuable, let yourself focus more on what you enjoy in life and outsource some things you don't really enjoy like financial planning.
You can always keep saying, "I'm going to up my 401K balance next year" and you keep kicking the can down the road. And if you come to my office and you're paying me, I'm going to keep asking the question, "How come you haven't upped your 401K?" And it's going to get awkward after the third meeting if you're not listening to my advice, and you're paying me to give you advice. Maybe your money's better used for something else if you're not going to listen.
The biggest thing we're doing is holding people accountable, motivating people to meet their goals. Spotting tax inefficiencies, saving our clients time and money is really important.
What would you say are some of the biggest misconceptions you see about financial advisors?
That we're all sales oriented, that only the rich can really hire us, we only work with retirees. We don't speak the same language as younger clients. We all charge very high fees. Those are some I've heard and all not true. My community is all fee-only with a wide range of clients – my average client age is 36.
When you're approaching your business, how have you been able to get clients to be able to trust you?
My first meeting with clients is all about who they are and understanding their life goals, whether directly related to money or not. Understanding my clients on a deeper level and building a more meaningful relationship is a big focus for me.
It's definitely more than money, it's inspiring them to reach for their goals and do things that will make them happy. For example, one of my clients had a pretty sheltered childhood, and she wanted to try something new. I asked her, "What do you want to try?" And she wanted to try wood shop, so we found a course for her to try out and she felt really liberated.
If I can help my clients align their money with their values and live a more fulfilling life, that's really what I want. I’m all about getting my clients to live their best lives!
Is there anything else that you would like to add?
The sooner you start working with an advisor I think the better, so you can [invest in] banking earlier. Save more at a younger age to progress and it will grow!
The first advisor you reach out to may not be the right fit, but just keep looking, there's definitely an advisor for everyone.
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