Latest / Marci talks money (and life) / Financial Professional Jenna Biancavilla on Money Management and Financial Literacy
Transcript
- Marci Grossman (00:00) Hello, I am MoneyMarci, welcome. I'm thrilled to welcome today's guest, Jenna Biancavilla. Jenna is a female financial expert and the owner of Pearl Capital Management, a financial service, let me try that again. Jenna is a female financial expert and the owner of Pearl Capital Management, a financial services firm with a passion for helping people. Additionally, She leads the Arcadia team of Geneva Financial, a home loan company powered by Humans. Jenna's newest venture is a financial technology company called SVVY, which exists to solve the systemic problem of predatory salespeople in the financial services industry by creating a platform to give women a safe place to find experts. Welcome, Jenna. Jenna Biancavilla (00:52) Thank you for having me, Marci. I always get a little nervous when people read my bios. ⁓ I'm still ⁓ maybe a little bit imposter syndrome of, is that really me? Marci Grossman (01:03) I think we all are. ⁓ No matter how true our introduction and our bio is, it's still, wow, she sounds impressive. I wonder what she's like. Jenna Biancavilla (01:05) you Marci Grossman (01:18) So how did you get here? Jenna Biancavilla (01:22) ⁓ well, you know, as most entrepreneurs will tell you, ⁓ they did not have that perfect plan, that perfect ladder to climb up. In a short, maybe a series of unfortunate events is how I got here, which is not what you want to hear of how you get to a place of running some successful businesses. But ⁓ my first entrepreneurial jump was working in big banks and realizing that they actually were just profit driven companies that put shareholders first. And I was the frontline, telling all of these clients that we were going to put their finances first and then having to go to these meetings and realize that my managers said, no, no, you're going to sell this investment so that we can make Presidents Club. And we don't care really that it's not a good fit for the client. ⁓ I did that for eight years and realized I didn't want to answer to shareholders, I actually wanted to answer to my clients. But you can't fault them. I'm an investor as well. So for the companies I invest in, I love that they answer to shareholders. So I probably could argue both sides of that. But that was my first leap ⁓ as an entrepreneur was just wanting to do things different. Marci Grossman (02:37) Okay, and So your background is financial or business or what that you ended up at the bank to begin with. Jenna Biancavilla (02:44) Oh yes, always wealth management. So I started as a licensed financial advisor in 2010. I was an assistant in the financial services industry in 2008, 2009. So I don't know why I liked it when I was working underneath advisors during the financial crisis and helping call their clients and getting yelled at. I did nothing wrong. And apparently I thought this was a great profession. I'm going to stick with it. So I do have to say if you can get through the being at the bottom of the totem pole during the financial crisis, you could probably get through anything. Marci Grossman (03:22) That is true. ⁓ Did you talk about money growing up? Is that how you ended up in the financial services industry to begin with? Jenna Biancavilla (03:31) No, I actually had parents that were terrible with finances. So very typical American parents who were, you know, just doing enough to get by. My dad, you know, bought our home with the VA loan, zero percent down, and then kept using the house as the way to buy the next thing, refinanced the house to buy the boat and the truck to pull the boat and just kept using the home equity to pay for life and a lot of debt and a lot of fights. ⁓ Actually, I think that's what drives my desire to be financially independent is because my parents didn't have that growing up. But I've always been a math nerd. I've always liked numbers and I also like people. So it all fits really well together. But unfortunately, I can't say it was because I had an easy money upbringing. Marci Grossman (04:24) Well, but sometimes the things we learn are what we want to do and sometimes the things we learn are what we don't want to do. ⁓ Do you have siblings? they in the financial industry as well? Jenna Biancavilla (04:37) So I have a younger sister. is actually a successful, she works in technology. And the really neat thing is the technology company, the financial technology company that I launched, SVVY, I actually launched it with my sister. So we brought my finance knowledge and her technology together to make SVVY, which is really fun to be working with my sister. She has probably the same scars that I do and the same drive to be financially independent. Marci Grossman (05:10) Fair enough. so you're currently in three different companies. You've got Pearl Capital, the Arcadia team, and SVVY all going at the same time. Jenna Biancavilla (05:24) Yes, what was an interesting conversation, the call I had right before I'm talking to you today was looking for maybe my replacement over at SVVY. So the tech company is growing up and probably needs a real CEO. So I'm looking at hiring a CEO to come in and help get SVVY to the next level because ⁓ to your point, I cannot run all three companies simultaneously. but. If you're a good founder, you know how to hire the right people to help you. Marci Grossman (05:55) That makes a big difference being willing to hire people that are better at something than you are or smarter at something or more dedicated to that one path. I think a lot of entrepreneurs restrict their growth because they're too afraid of hiring someone who might be better at something. Jenna Biancavilla (06:16) ⁓ we're not afraid of hiring someone that might be better. We have full confidence that no one could be better than us. I spend a lot of time with other business owners and entrepreneurs. So I know what's going on in all of our head and everyone feels like no one will ever do it as good as I do with as much passion as I do. So it's not fear, it's ego. ⁓ Marci Grossman (06:38) Okay, fair enough. enough. Well, tell me about what are the same and differences between these three companies? Because from the outside they're three financial companies. Okay, What makes them special? Why would I go to one versus the other? Jenna Biancavilla (06:57) ⁓ great question. ⁓ So Pearl Capital is traditional wealth management. We work with families, business owners, retirees on how to help grow their wealth, but then also preserve their wealth. A lot of our clients that are retiring, their biggest fear is running out of money in retirement. But we also have people who are business owners who really want to preserve their wealth, make sure that they don't have a lot of tax leak, which can happen often if you don't have tax strategy. And so that would be a traditional investment wealth management firm. ⁓ That's where I spend the majority of my time. ⁓ Geneva Financial is actually a lending institution. So It is the Arcadia branch. So It more feels like a franchise. So I'm just running a branch under Geneva Financial. It doesn't really take much of my time because I do have loan officers that work for me on that side of, or on that business. For regulatory purposes these entities need to be very separate. So they are two different companies. But if someone wanted a home loan or a commercial financing, Geneva Financial can help with that. And because I'm a little bit of a control freak, I like to be able to open the books and see what type of loan my clients are getting and make sure that there's not all of these unnecessary fees. So it might feel a little more like a loss leader so that I can have control, because I saw a lot of people being taken advantage of by predatory loans. But then that leads me to why I started SVVY was because I've also seen people taken advantage of by predatory sales people that are commission driven in the financial services industry. And I realized Pearl Capital alone, it's a professional services company. I can't scale it big enough, fast enough to really change the culture of how many predatory people are still in the finance industry. So the idea of SVVY was this nationwide platform that vets out financial advisors. So we were actually interviewing and finding the people who are not charging high commissions, who don't have all of these backend kickbacks, and who actually are doing really good work. And we put them in our community and we connect female investors with advisors they can trust across the country. So that's my passion project on how to try to make the industry a safer place for women. Marci Grossman (09:18) Okay, I'm going to go kind of off on a side. So if this isn't a comfortable area, we can we can back off and I can delete it. But could you talk to appropriate ways of how investment advisors are paid and the various ways that that they charge for their services? Jenna Biancavilla (09:37) Absolutely. Do you want to ask that question again so we can keep it in here? Yeah. Yeah. Marci Grossman (09:43) Yeah, I can keep it in here anyway. I know the boss. But sure, Can you speak to the ways that various investment advisors charge their clients? Because obviously, you want to get paid for what you do and there's predatory out there, but there's also this is fair and reasonable. And there's so many different ways that investment advisors can charge for services. Jenna Biancavilla (10:06) There are four main ways that they can charge for services and it is absolutely confusing. I am infuriated by how the industry has not done a good job to make this clear for consumers. ⁓ So This is something I'm very passionate about and I would love to maybe try to explain these four main ways. ⁓ The old school way that financial professionals make money is as a stockbroker. They're commission driven, they're commission only. Every time they buy you a new investment, they make a commission. This can be anything from a mutual fund that pays them 5 % or maybe even an annuity that could pay them 14%. And so they have this conflict of interest to sell you things that are going to be a little more risky or lock your money up or have a whole bunch of penalties and fees because they make more money off of those same dollars. So that's what a commission looks like. Then we get the next step, which is called fee based. This is super confusing. A fee based advisor gets to choose to sometimes charge a fee, a flat percentage fee, or sometimes charge a commission. And there's no way to know when they're charging you a commission or when they're charging you a percentage fee, but they still have that same conflict. They want to sell you some really expensive annuity. And so when they see that, they make sure they jump over to the commission side so they can make that high commission. So there's commission, then there's... fee-based, both of these have commissions associated with them and a lot of back-end fees that consumers can't see. Then you get to fee-only, which sounds very similar to fee-based, but is very different. Fee-only would be only able to charge one flat percentage fee. So a typical fee on fee-only is 1%. And so a fee-only advisor, it doesn't matter what investment they sell or how many times they change the investments. their fee always stays the same. So I'm pretty passionate about that fee only being aligned with the client's best interest because it doesn't change based on the investment recommendation. So the client can now let their guard down and know that they're not being sold something because the fee stays the same. And then there's going to be flat fee. So flat fee might just feel like $10,000 a year. Also doesn't change based on the investment recommendations. But what I'm seeing is a lot of these flat fee advisors, they're not charging enough to stay in business. It hasn't been sustainable and it hasn't kept up with inflation. And so while I really like it, and that's probably the lowest price that you're going to get is flat fee advisors. The question the industry is asking is about sustainability and quality, because that would be your lowest tier. So that would be your Walmart version of the lowest price you can get is usually a flat fee advisor. Marci Grossman (12:53) Oh sure, I remember seeing the ads. I don't remember what broker for $8, you know, will do your trade for $8 and whatever else. But on the fee base, that 1 %... Oh wait, that was fee based, right? No. Jenna Biancavilla (13:04) Mm-hmm. So exactly. So a fee-based advisor, it could charge 1 % or a commission. It would be fee only, the word only, that can only charge the percentage. Marci Grossman (13:10) You Either way. Okay, so fee only. Are they charging that 1 % on your net assets or on your transactions? Jenna Biancavilla (13:27) it would be the assets that they are managing. So if you have a checking account outside of management or you have real estate or your wealth is outside of the advisor's management, that is not calculated in there. It's just the account that the advisor is giving advice on. They're giving advice on the whole account. That's an annual number of 1 % per year. And they should be giving advice on the whole entire account for that year. Marci Grossman (13:54) So Those are the ones we hear the ads about. We're a fiduciary. We don't charge you transaction fees and whatever else because they're charging fees based on the total assets they're managing. Whether they have a hundred transactions or no transactions, they're hopefully making the best decisions for the overall investment pool. Jenna Biancavilla (14:16) And they have the conflict, I'm putting it in quotes, because I think it's more an alignment than a conflict, but their interest is aligned with the client because 1 % of more money is more money. So they want your investments to grow. 1 % of less money is less money. So if they are not doing a good job, their income goes down. So this is now putting you guys, the client and the advisor on the same seat at the table and having alignment in wanting that to grow. Marci Grossman (14:43) Okay, well thanks, I appreciate that, because I didn't prep you for that one. Jenna Biancavilla (14:48) No, that's okay. I want to speak on something you said, which was the word fee only fiduciary. ⁓ Because we love that word fiduciary because in theory it should mean that the ⁓ professional is required to act in the client's best interest. But what I've been seeing is because that word is not regulated, there's no specific requirement or license to use that word. There's actually a lot of commission based salespeople who picked it up and saw that this is a shiny object and a fun marketing word and are using it. And I actually spoke to someone who only sells life insurance and they have a conflict that if they sell more life insurance, they make a higher commission, which in my world would not be the definition of a fiduciary because you have a conflict to sell more. ⁓ And he was trying to explain to me why he was a fiduciary. And I actually couldn't get through to him to understand the conflict where I even asked, said, well, would you sell me a $1 million life insurance policy or a 5 million? And he said, well, 5 because I'd make more money. And I said, that is why you're not a fiduciary. But I think it's worth telling the general person who's looking at hiring someone that that term is not regulated. A lot of people are throwing it around. So don't hire someone just based on them throwing that word at you. Marci Grossman (16:12) Yeah, I always think it's important when they say, well, if you're doing better, we're doing better. If we're doing better, you're doing better. But that's not true because I could deposit $100,000 into the account and you lost $10,000, but we're now $90,000 up and you're gonna make more money. So it's a matter of how much is in the account. It doesn't matter how it got there. Jenna Biancavilla (16:30) Mm-hmm. It's frustrating. see all the time. This has happened several times where I've seen a woman who is now managing the assets when previously, whether it's her late husband or maybe ex-husband or even father was managing it and now she's new. She's talking to all of these smart, condescending advisors who are talking down to her and she's got plenty of money and she says, hey, I just want to buy. a little condo to be closer to my grandkids, can I take out some money for the down payment or to buy this condo? And she can afford this, but because the advisor makes a percentage on the money that's in the account, he's giving her advice that she can't afford it. And so even those advisors who are charging a percentage that are supposed to be fee only fiduciaries, they do have the conflict of should the money be in the account or outside of the account. So you'll start seeing that conflict of interest there if you're looking to send money out of the account with them. Marci Grossman (17:39) And that's why it's always good to have more than one financial advisor, whether it's you also talk to your accountant or, you know, whomever it is, your spouse, your somebody that you can, you can have these conversations with more than one person that is aware of your situation, hopefully a professional that's knowledgeable and educated and not necessarily vested in the outcome. Jenna Biancavilla (18:04) Well, and I almost sound like I'm, you know, poo-pooing all investment advisors because there's so much to be concerned about in the conflicts of advice that's being given. But if you do find good professionals to help you, the data is that you will be better off than if you don't have people helping you with strategy, which is going back to my passion of why I started SVVY, was to just weed out all the bad guys and connect women with people that they know they can trust. Because I know how to ask those questions, so I wanted to use that skill and give it to the country as a greater good. Marci Grossman (18:45) I totally respect that. So let's kind of take a step sideways from that little condo I'm buying to visit whomever. ⁓ Trying to balance that saving responsibly for the future and enjoying your money now and finding that balance because that's hard for a lot of people and especially as they get older and you've been in the saving mindset for your whole life and now you can start shifting to that spending or even during your life, you don't wanna restrict yourself so much that you never get to enjoy what you're working so hard for. So how do you balance that? Jenna Biancavilla (19:23) This is such a good question. I am not a believer in budgeting when you get to a certain point. ⁓ Budgeting when you're managing, you know, still in debt and you're just getting started can be very helpful. But at some point, once we have accumulated wealth, we're moving towards our goals. I like more of a goals-based approach. So... And because I'm a planner, I like to start with a big picture of what do we want to do with our money? What are the goals with the money? And it might be a retirement where we can spend X amount of money, go on this many vacations a year. Maybe we want to spoil kids or grandkids. Maybe we want to help with college or down payments of houses for someone. So we write all of these goals in place and then we rewind back to today and make sure that we have income minus the savings needed to hit those goals equals what you should be spending. So instead of budgeting, don't spend too much, cut, it's what is left over after all of the savings rates to hit your goals. And if that's enough and it feels good, spend it, enjoy it, because you know you're saving enough to hit all of your goals. If that's not enough and you need to spend more, you now are empowered with what the trade-off is because we have to take some of the savings away from one of those goals in order to increase your spending today. And you can say, you know what, I actually don't want to help my kids with the down payment of their house. They can get a job. I want to spend more money today. And so now we know where the balance and the trade-offs are. And so it's less about budgeting and it's more about life planning and financial planning of what the intention is for your money. And now you're empowered to spend it. So I love giving money goals and priorities. Marci Grossman (21:16) Yeah, no, I totally agree with that. ⁓ If you don't know where you're going, it's going to be pretty hard to get there. What about setting priorities to help motivate savings? Because I know so many people, yeah, I wanna save, but there's also this cup of coffee or this shiny object or this vacation or this whatever. And so I'll save later on. Jenna Biancavilla (21:44) Well, because I'm a business owner and I do work with a lot of business owners, I love the book Profits First or this concept of taking your money that you're paid, whether you're a business owner or a regular W2 employee, but taking what you're paid and saving for yourself first and even maybe putting it in intentional accounts. So this already happens when the government takes their portion of your money for taxes. This already happens if have a 401k and usually you spend the rest and you figure it out. So the concept of profits first or pay yourself first is the same thing, but we're just doing it in addition to taxes and 401k. So maybe we're automatically transferring to the vacation fund, to the buy a house or buy an investment property fund, to these various different goals accounts that have labels on them. And then when you say, I want to go on a more expensive vacation than the amount of dollars that are sitting inside my vacation fund. You actually have to look at these other accounts that have different labels and say, do I want to rob my kids' college account to go on the vacation or do I want to leave the money there? And so if you give it all purposes, now you are actively empowered with what the trade-off is. And sometimes you want to take the trade-off and say, Hey, my kid's been screwing up. Doesn't seem like they're college-bound anyways. I am spending that on vacation, and you can take the money right out of there. ⁓ Marci Grossman (23:14) You may think you want this extra elective in college, but I want heated seats for my car. But yeah, no, I like that. I like that a lot. Do you deal with tax strategies in your planning? Because you're not necessarily, you're working on the investments for business owners, but you're not the accountant or the tax preparer or the tax attorney, whatever. So how do you get involved in those? How much are you involved in those decisions and strategies? Jenna Biancavilla (23:48) So I say tax strategy or tax planning, but we do not do tax advice or tax prep. So now I kind of sound like a lawyer in the words I'm using here. ⁓ We have to be very closely connected to tax if we're doing good strategy because ⁓ tax leak is one of the largest expenses and largest waste that we see in someone's financial plan. Everyone talks about a cup of coffee or a Netflix subscription, but if you don't have a tax strategy, that's going to add up so much faster than your daily cup of coffee. So I think having a strong tax strategy is important. ⁓ I spent the first decade of my career looking for CPAs and accountants that did good planning work. They're so hard to find. So finally, we brought the planning work in-house and we always introduce ourselves to our client's tax preparer or their CPA. And what we do is we actually write the lifetime plan and the lifetime tax strategy for every single year between now and age 100. And then we talk about where there's opportunities and goals throughout their lifetime and what we should be doing from a tax strategy in each of those years. And then we just hand it to the CPA. They give it the approval, they give it the, yes, this is good. So they sign off on the plan and then they implement it. So we do have the CPAs implementing and they're the ones preparing the taxes. But because no one else was writing the lifetime plan, we just started writing that in-house. Marci Grossman (25:25) Okay, and that would involve what type of assets they have or when you might sell assets from their funds. I hear so many people chasing their losses to bury their gains in December all of a sudden. Okay, what stocks have I got that's gonna bring down my capital gains? You're talking about those kind of things as well? Jenna Biancavilla (25:48) Well, in a perfect world, don't lose money on our investments. So I would say tax loss harvesting is not an ideal strategy. Ideal is make money on your investments. ⁓ But it would be, so For example, someone while they're working is going to be in higher tax brackets and higher earning years. And so being strategic and maybe not taking capital gains on some of those investments while we're in higher years. Also intentionally putting more money into retirement accounts that are tax deferred to lower our income in those years. But then the second we stop working, starting to have a strategy to get the money out because now we have access to lower tax brackets. And so we're looking at what tax brackets we have access to in each year of your lifetime based on what we're planning and then making sure we're harvesting the lower ones and lowering the higher one. So we're basically smoothing that out and that can effectively save someone 10 % on tax if you can go down from the 30 % brackets and then up from the 15 % brackets. Marci Grossman (27:00) Popular strategy now that I hear a lot of people talk about is converting your 401ks and IRAs into Roths. ⁓ Is that one of your strategies that you use? Jenna Biancavilla (27:12) I like strategic Roth conversions if we if we have access to lower brackets. So some advisors are just saying, in your highest earning years, convert your whole IRA to a Roth IRA, which is a terrible idea. You're just locking in a high tax bracket and you're just pushing yourself into a high tax bracket. And so there are terrible Roth conversion strategies. are terrible people or There are people who hear you should do a Roth conversion and don't implement it well. But if you're looking at, especially if we have fluctuating income, if we take sabbaticals, if we're a business owner and we have access to these really low tax brackets, absolutely, you do a Roth conversion for a strategic amount up to the next tax bracket so that you can lock in something like 12%. Why wouldn't you if you know in the future you're gonna be back up into the 39 % again tax bracket? Strategically using Roth conversions to harvest lower brackets and lock in lower brackets is what you should be doing for a Roth conversion. So it's a little bit more than just a blanket 'do it' statement. Marci Grossman (28:21) And I want to be very clear, we are not offering anyone specific financial advice. You need to talk to financial advisors who know your situation, your tax situation this year, your tax situation projected for next year so that you are making the best decision for you. We're just giving you some advice of things to kind of be aware of and look at as you are having these conversations with the financial professionals in your life. Why do you think people don't talk about money? Do you have couples come in or individuals come in and they're like, here's my money, just make it do what it's gonna do and leave it to you or by the time they come to you, they want to be having those conversations? Jenna Biancavilla (29:07) People, for the most part, by the time they book an appointment with us, they're ready to start having a conversation about money. Every once in a while, I'll talk to someone who's a little guarded to start. But we end up becoming more of this therapist type person in our clients' lives because they've told us more intimate details about their lives and their finances than they've told some of their best friends because most people don't talk about money. And so because they talk about things with us that they don't tell anyone else, they do have this very unique connection and trust. I didn't realize when I came into this industry how many people would cry in my office. All my training is in money and dollars and spreadsheets. And I actually needed to learn a little bit more on how to deal with the psychology side of money and the emotional side of money once I got into the profession. But it is... It feels taboo because we have so many of our parents and the older generation telling us it's faux pas, it's taboo, don't talk about money, it's not polite. But it's also something that for many people feels like a scorecard or a comparison. And it's showing how you are playing the game of capitalism. ⁓ And it doesn't feel good if you feel like someone else is winning and you're losing. And so there's this sense of because no one talks about it, because corporations don't tell us how much all the employees are being paid and we're just hiding it because we don't want to be embarrassed or we don't want to make someone feel bad. ⁓ Because it does feel like a scorecard. Marci Grossman (30:58) That is definitely true. I can't tell you how many articles pop up on the internet. This is what you should have for your retirement assets at this age or this is what you're making at this age. Of course, when you look at all the different places across the country, they could be living. It really has nothing to do with anything because the money in New York is different than the money in ⁓ rural Michigan or anyplace that's not in a high cost of living area. You can't compare these. They don't dive deep down enough for any of these comparisons to be worthwhile. Jenna Biancavilla (31:42) And everyone has something different that they value and that they want for their life. For some people, it's just quality time with people they love and they don't need all the extra stuff. And candidly, when people get to the end of life, that's what they say is the best part. It's not the dollars in their bank account, it's the people around them. So to that point, if someone doesn't care about material items, why are we judging and comparing ourselves based on how much we should have saved by a certain period of time in our lives? Marci Grossman (32:24) Definitely true. Jenna, do you have anything else you would like to mention that maybe we haven't covered? Jenna Biancavilla (32:31) You know, I would say that because so many people don't talk about money, it's actually the thing that's making us the most vulnerable. And the more you talk money, as you know, you have a whole platform, a whole podcast based on talking about money. You know more, you're empowered more. You can learn lessons through someone else's ⁓ lessons learned the hard way instead of you having to go through it, the hardship on your own. And I think it's very empowering to not leave yourselves in the dark, but start dabbling in money conversations with people. Because it's my profession and I talk it all the time. I have tried to ask different ways when I'm in other social settings of hey, I'm a money person, would you mind if I asked a couple questions about some of the details and the logistics on that financial transaction and how that came together? And I would say 90 % of the time, people are very excited to share. They want to tell these details, they just wouldn't want to rub it in someone's face. So ⁓ maybe just try asking if you can politely try to understand details of different financial maneuvers, transaction strategies, it might take you a long way. Marci Grossman (33:50) That sounds good. Well, Jenna, thank you so much for being my guest today. We appreciate you taking the time to join us here. Jenna Biancavilla (33:57) Thank you, Marci. It was lovely chatting with you. Marci Grossman (34:00) you And to my listeners I will be sharing a link to Jenna's information in the show notes. Please check her out, check out her company. She shares a lot of interesting information. Let's see. Don't forget to subscribe, leave us a review and stay tuned. I'll see you next time. This has been MoneyMarci on Marci Talks Money (and Life). You got this.