From Architecture to Finance... how did that happen?
'Life is what happens while you're making Plans' - John Lennon
Matt Love has been in the Financial world for over a decade now, but he didnt start off that way.
Matt Graduated with an undergraduate and a Masters degree in Architecture from Lawrence technological University with the dream of becoming an Architect. He graduated toward the end of 2008, at the height of the recession. A time when very few people were building homes, the Real Estate market was tanking, people's retirements accounts were crashing, and the economy was in a downward spiral.
He was lucky enough to work as a designer with one of the top residential Architectural firms outside Detroit, Michigan, Young & Young Architects (YY). He was able to work on projects for people who seemed to be recession proof. In a time when people were losing their jobs and losing their retirement savings, somehow, these wealthy families seemed to thrive.
As an Architect, he surrounded himself with the best of the best, with YY being a local legend in the design field with over 50 years of beautiful homes under their belt. He watched as the Lead Architects, Don and Todd Young would create masterpieces.
It was a very humbling experience to say the least... Not only were their design abilities second to none, the way they handled business with their clients was amazing to watch.
Matt talks about working on a small project for a 'remodel' of an older house, the client didn't have a large budget, which is probably why Matt was allowed to do so much work!
After a third rendition of the project, he was sitting with Don and Todd, Matt was concerned because after three renditions and STILL not ready to move forward with a design they were surely eating through the already small client budget in a private meeting with Don, Matt asked him if he was concerned about the budget, because they would be losing money on the project...
Don paused.
He looked at the ceiling, and slowly began to smile.
He looked down at Matt and said simply
'We can always make it better'.
That hit Matt Like a ton of bricks.
In that moment, Matt realized the beauty of Architecture should always take precedence over the business of Architecture.
On a project that was surely going to cost the firm more than they would make, Don never waivered off the principles of art and design, and ONLY with great design can come great results.
This is probably why YY has remained one of the most sought after firms for custom residential projects for decades, and continues to perform with very little competition.
Fortunately, or unfortunately, It wasn't long before Matt realized he was never going to be as GREAT as his mentors it was a troubling realization, after going to school for 5 years, and working in the industry for a few more, he was faced with a choice.
'Do I keep pushing and forcing this progress in a field with better talent, or do I Pivot'.
After long internal debate, he decided to Pivot.
He took a role in Chicago where he could 'design man caves'.
As he puts it - 'I get to design the LAST room of the house that the man can call his... The GARAGE!'
In chicago he learned a few more things about business, that are quite simple. In fact there Is an old business coach you may of heard about, named Zig Zigler, who coined the phrase that matt realized in the field.
'If you can help people get what they want, you will surely get what YOU want.'
Chicago presented great opportunities to GET OUT of the shell of education and being told what to do everyday. It allowed him to meet new people, engage, learn what people are looking for, and MOST importantly, find a way to deliver those desires to his customers.
Matt quickly became the top representative for his company with more projects under his belt than the other two representatives combined.
The difference in this role was Matt not only was able to DESIGN the project... he was able to help the clients put it in place.
Afterall, just like his projects at YY, these projects have budgets... and a hierarchy of important aspects for each project... and Matt was able to work 1:1 with the clients in making their dream projects a reality.
No, it wasn't a 7 million dollar house, it simple garage projects ranging from $1,000 to $34,000 projects.
Instead of one project for 9 months, there were 9 projects in 1 month!
Repetition sharpens the saw.
After two years in Chicago Matt started to get a taste of success.
Success is NOT making money either, success is surrounding yourself with people to help AND people who inspire you to get better, and Matt was successful.
Around this time that one of his best friends experienced a life event that was a jolt of reality.
One of his best friends from College was struck with a tragic event when his Mother passed away only 4 months after being diagnosed with Cancer. His friend never met his dad, and his mother was all he knew of family, except for an aunt and cousin.
It was an incredibly sad time.
After the dust settled, it came out in conversation that his friend was going to inherent a lump sum of Money.
You see, his mom passed away at 63, she worked up until she was diagnosed and she saved all her money in a
typical qualified retirement plan... a 401k.
She saved money her entire life...
In an account she never used...
For an event she never experienced...
and when she was gone,
her son had a choice (the laws on this have since changed a little).
Do I take the money out over (no longer than) 5 years?
or,
Do I leave it in the same type of retirement account...
without using it...
for an event he might never see...
BTW, this is why Matt says your financial advisor loves your retirement account more than you;
Because fees are taken out of that account every quarter to pay the advisor, on the pre tax amount, and the client can't touch it without penalty or loans until they are 59 1/2
(BTW, this is why Matt says your financial advisor loves your retirement account more than you, because fees are taken out of that account every quarter to pay the advisor, and the client can't touch it without penalty or loans)
What made this decision even more difficult is that his friend was only 27 years old!
Retirement was a LONG way a way, and afterall, why was his mom saving in the first place?
She probably expected to enjoy that money at some point, and if SHE didn't get to enjoy it, Isn't it safe to assume she wanted her ONLY son to enjoy it?
This was a difficult time to say the least, because not only was his friend grief stricken, he was forced (the IRS requires a decision) to decide what to do with hundreds of thousands of dollars.
More money than he had ever seen.
Well, Matt comes from a family who was always involved in the financial world. His father Tom Love and grandfather Ernie Love were both financial professionals.
Matt never thought he would get into this world because he liked Architecture.
He likes reason behind decisions.
He is NOT a gambler.
When it came to money and the stock market, Matt's old opinion was that you just put money into an account, cross your fingers and 'in the long run' the account will go up, a very passive way to view the role of money.
After all, we are taught to go to college so you can get a good paying job, then put money into that retirement account so you can eventually quit working...and he saw
FIRST HAND
how flawed traditional financial strategies are when 'life' gets in the way.
Matt decided to introduce his friend to his father to see if he could help the situation. Without going into too much detail,
they helped.
See, if his friend decided to take that pre tax money out of the account he would be forced to pay income tax on that money.
The alternative would require him to leave the money in a retirement account for 32 years... longer than he'd been alive.
He watched his mom pass away without enjoying that money.
He decided to take the money out, and yes, he paid taxes on that money... ON TOP of his own income. (IRS Rules)
He was paying income taxes on his paycheck, and every dollar that came out of the retirement plan came out on TOP of his ordinary income.
Was he in a smaller tax bracket?
Who knows.
We don't know what tax bracket his mom was in when she was a working parent with a mortgage...
what we DO know, is that because there was no plan on how to transfer that money, he was at the mercy of tax law at the time she passed away, needless to say, it was painful, but a valuable lesson;
If YOU don't have an exit strategy,
the IRS has one for you.
It is Matt's opinion, that the financial system is set up to benefit off the savings of working Americans.
Think about the last time you met with an advisor that taught you how to SPEND money...
not save it?
They get paid when you save, not when you spend.
But what is your goal with every dollar that you save... Eventually you want to ... What?
SPEND IT!
Matt calls this Cash Flow.
The traditional flawed method says you should work 30-40 years of your life and save money in an account where:
the advisor gets paid fees every year
the Mutual funds get fees
the money is required to stay in until you reach a certain age
you have limited access you can possibly postone tax on the growth, yet you'll be liable for those future taxes at whatever rates are when you retire
if YOU don't take the money out, at a certain age they force you to
if you pass away, your surviving spouse will be forced to take that money out at a certain age
likely, as a SINGLE taxpayer (different than when married)
your subject to market volatility (this year the market has corrected substantially)
The government constantly changes your tax rates, which make it impossible to guess what rate you'll be in during retirement
and finally
If YOU or your SPOUSE have money in there when you both pass away, your heirs will be forced to take the money out over 5 years (according to new tax law) - ON TOP OF THEIR OWN INCOME.
Matt learned a great deal during this interaction, not the least of which is that the government doesn't mess around when it comes to taxation.
It seems most people try and fix that problem by growing their account to a huge number to make up for the future tax obligation, which is a great idea, until the market drops 20% within a few years of your retirement date.
At the time all of this happened with his friend,
Matt was also 27 years old, and doing what was popular,
he was maximizing his retirement account.
He was saving money in an account that was locked until age 59 1/2 and postponing a tax bill, when he was likely in the smallest tax bracket of his career.
Remember the success part?
He realized if he WAS more successful as he got older, his future tax rates would likely be higher... because he'd be making more money!
Why would we postpone a small tax, in an account we are literally trying to grow, and take it out during a time when taxes (if everything goes according to plan) will likely be higher?!
Matt's father helped his friend set up a strategy that accomplished the following:
take care of his friends family if anything were to happen to him
allow use of the money BEFORE age 59 1/2
self completing if the his friend became disabled
allowed for tax free growth
use whenever the client wanted
gave the client a strategy if his future kids ever wanted to go to college
can be collateralized with banks
created guarantees of NO LOSS regardless of market conditions
generate tax free cash flow
and could be funded by as MUCH AS HE WANTED...
What was it called?
Life Insurance
That's right, one of the most commonly misunderstood financial products available.
a 27 year old healthy single guy, benefited from Life Insurance.
His friend set up a secure plan that had guarantees.
He was healthy, so the cost of insurance was relatively low
and he was able to design MANY living benefits.
before they got started, neither Matt Nor his friend knew Life Insurance had so many options to use
BEFORE DEATH.
they thought life insurance was just a product that paid heirs at the time of their death.
they were wrong, and they both learned a great deal.
At this point Matt realized designing 'man caves' was probably NOT the long term plan.
Just as we all realize;
Life is full of lessons,
and it is up to US to choose to pivot when we know its the right thing to do.
So, he pivoted.
2011 he decided to join his father's firm and learn the financial world, and true to experience, that was ANOTHER learning experience.
Not long after starting, he began to realize MOST of the advisors in their independent office really had NO structure to their reasoning.
As an Architect, the reason behind a decision is likely MORE important than the actual decision.
for example.
If you want to build a structure that will last the test of time it better be sturdy and pass the test of time.
Would you use Glass for the foundation of a building?
of course not.
why?
because glass isn't structural, it breaks.
Foundations are (typically) concrete...because its strong and can hold a heavy load on top.
Only AFTER you realize the foundation needs to be sturdy, you choose the product.
Concrete is an obvious choice, because of its qualities.
This is not subjective, there is no opinion about that.
Objectively speaking, concrete is the smartest choice.
After you decide the product based on the objective qualities,
ONLY THEN
can you bring subjectivity into play...
Should it be a poured concrete wall?.
or maybe concrete block?
Maybe you can use concrete pilings or columns dug down deep, and spread them out so you have a few columns to build a structure on...
Or perhaps you just pour a concrete SLAB on the ground to create a platform.
You have to make choices based on principles.
NOT opinions.
ONLY AFTER you follow the principles do you have permission to be creative...
of course, that's only if you want a structure to last a long time.
It didn't take Matt long to realize the financial world did NOT have the same principle based strategies involved in decision making with clients.
Instead, advisors make one off decisions and talked about products to do singular tasks without an overall strategy.
Words like ROTH, or LIFE INSURANCE,and of course Retirement Plan were thrown out every day...
But just as a house is designed as a whole, these products seldomly create a sturdy strategy unless they are coordinated.
It is sad to see so many advisors lack a structure in their decision making with clients.
Matt is adamant in a simple conclusion...
'There is no such this as bad investments or products, only bad investors and advisors'
Financial products are objective 'things'. One should not have opinions about them. Instead they should be viewed as pros and cons. Each product will have pros, and each product will have cons.
In Architecture, we know why they build foundations out of concrete, for the pro qualities that it can hold heavy loads...
did you also know,
engineers use concrete for roads, which can lead to a very NEGATIVE experience.
If you live in the northern states, you know how rough concrete roads can be to drive on. There are expansion joints evern 10-12' on the highway, and typically massive cracks that require patch work... all of which make for a horribly rough ride at 70 mph.
Why is that?
It's simple, while concrete can hold alot of weight and become sturdy, it is a objective fact that concrete has almost ZERO tolerance for movement!
which means,
if the concrete moves in the slightest, instead of bending or moulding to the change, it simply cracks completely.
(engineers have introduced steel inside concrete, called reinforced concrete which 'helps' with this factor, but with varying results).
SO Concrete = strong and sturdy (good)
No tolerance for movement (bad)
Matt wants you to view financial products the exact same way.
Understand the Pros and Cons
Take it from the clients who are older and experienced.
afterall, experience is what you get, when you don't get what you want.
financial success is NOT just a big pile of money.
Designing cash flow is NOT the same as growing one account.
To maximize cash flow, there are many products and techniques;
avoid opinions!
When he hears people saying things like' I don't like (insert financial product here)'
- He always responds 'based on what?'
Unfortunately people are trained to have opinions on products as if they are good or bad, It is a flawed thesis.
simply put, products have a purpose, just as concrete does for a foundation.
If someone came to an architect and told them they 'didn't like concrete', the architect would laugh.
When Matt broke his wrist a few years ago, he told the doctor he didn't want a cast.
The doctor laughed.
Literally.
The Dr. informed him that the X ray would determine if a cast was used, not his opinion.
Why don't we view financial products with the same objective perspective?
You DO NOT have permission to have opinions on products as good or bad, instead, we need to find out where the gaps our in a financial strategy.
Too often people think they just need a BIG PILE of money to retire, and that couldn't be further from the truth!
What happens when
The Market drops and your nest egg loses 25%?
Taxes go up and you're keeping less?
You die and leave a single spouse who could live another 25 years?
You become sick, and DON'T die, but have massive medical bills?
Furthermore, who is to say WHEN you want to retire? What is so magic about the age 59 1/2?
It has been Matt's goal to design a cash flow lifestyle that does not REQUIRE him to work,
rather he GETS to work.
You don't need to wait to a certain age to start enjoying the fruits of your labor,
If you design it correctly.
You see funding a retirement account without having conversations with your advisor about designing CASH FLOW undermultiple circumstances, You are likely setting yourself up for failure!
JUST concentrating on a retirement account is just like trying to build a house starting with the roof.
Every since the first introducing his friend to his father, Matt has decided to help people understand the different ways to create cash flow BEFORE and DURING retirement.
Life insurance can help you in retirement in many ways;
from tax exempt cash flow
to hedging market assets
to pension maximizing strategies...
The list goes on.
He has built a team of successful advisors around him who all specialize in different areas of planning to ensure clients get the best treatment possible.
There is also FREE training you can enjoy if you'd like to learn more about how products can help you with your own cash flow
If you want to get in touch with Matt directly, you can find a time by clicking the button below!
or visiting
CashFlowArchitects.com
Matt Love specializes in fixed products not subject to market volatility. Please do not take his bio as financial or tax advice, please consult a licensed professional for your unique situations
www.CashFlowArchitects.com