Dave: Hey everyone, Dave here with another episode of the Philly Tech Entrepreneurs podcast. Today I’m speaking with Ben Tuscai. Ben is the vice president of financial planning at Sunpoint Investments, and he primarily works with clients that have variable income. So, a lot of business owners fall into this bucket where you just have maybe like a variable cash flow or, you know, because maybe your business is going up and down. This is a situation that I’ve dealt with myself for the last decade, but it’s not exclusively business owners, if I understand it. It could also be people that work off of bonuses and commissions and things like that. So, Ben, how are you doing? Did I explain your role well?
Ben: You got it. You nailed it. Variable compensation is a big part of who we work with. Business owners are a big category of clients, but it’s a large spectrum across the board.
Dave: Yeah, love it. You know, as someone… it’s, I really relate to this because I have variable income and literally, I’ve had swings of, you know, 50 to 100% in a given year, right? Like it’s that level of swings. I think it’s… I’ve internalized it. I’ve gotten used to it as this being kind of part of my lifestyle, but I think many people just go crazy over it. And so, but at the same time, I also like to budget. I like to be on top of my finances. I kind of want to know what’s going on. So, how do you even approach this conversation? Like, where does one even start? You know, you’re sitting down with a potential new client for the first time. How do you even kind of go about getting a handle when the swings can be this large?
Ben: Yeah, I mean, regardless of the compensation structure, we always start with the same three categories, which is your calendar, you know, “Hey, what are we expecting to happen over the next one, three, five, seven years?” We overlay that with your cash flow. We usually use a tax return or the past two years of tax returns to understand, “Hey, what actually hit your 10-40? What was the tax rate? See, that’s the biggest expense for anybody in their lifetime, is taxes.” And then, what is the balance sheet? So, your calendar, your cash flow, and your balance sheet. And what the balance sheet is, is what do you own and what do you owe. So, understanding your assets and liabilities. And that’s the simplest form of getting to a net worth calculation, but we’re not totally concerned about a net worth calculation, just more understanding like, “Hey, what are all the pieces to the puzzle in somebody’s life and what do we have access to?” Or what do they have access to to pull from if, you know, income drops to zero for the year, maybe they started a new venture, or maybe income goes to seven figures. Great. How do we pay down maybe some debt? How do we add some things to the positive side of the balance sheet? Things of that nature. There’s always then the emotional overlay. Everybody has their own feelings on debt. Everybody has their own feelings on owning a home versus renting, things like that. So, we’re pulling a lot of that conversation out in the first several interactions. But the calendar, cash flow, balance sheet is how we start to work through that with everybody.
Dave: Makes sense. So here’s, you know, probably a dumb question, but, you know, you’re working with business owners. And so when you’re talking about liability and assets and things like that, are we thinking of that from like a personal standpoint, like, uh, the mortgage on my house and my car and stuff like that? Or is it like, does it ever transition into like the business, uh, like liabilities and assets? Because a lot of times, you know, if you’re like a sole proprietor or LLC, like there’s a lot of, I think relationship between those two. So how should we be kind of looking at that?
Ben: Yeah, so it’s actually like two… It starts as probably two different relationships. Like first, let’s understand how your personal cash flow and calendar and balance sheet operate. And then let’s talk about that the same way for the business. Maybe what the aspirations are, if you’re in a partnership or you’re set up as an S corp, depending on how the taxation lives for the organization, is always really important. So, we really kind of separate those two things. We understand that they’re married, you know? If the business is doing well, you’re probably doing okay on the personal side of things. If the business is struggling, the cash flow is probably not looking great. So, they are… They do start as maybe two distinct conversations, but they quickly evolve into just having like one conversation, and they’re always impacting one another. “Hey, if we’re trying to cut expenses on the business and raise cash for something like, okay, how is that impacting your daily life?” And then from a liability side, um, that may be debt, that also may be liabilities, risk of like insurance needs for the business versus insurance needs for you personally. Sure, they’re different, but the impact to you as a human being, the same. So, is it…
Dave: Yeah, is it fair to say there’s an element of like business consulting that goes into it?
Jake: Absolutely. I mean, especially if we just go to like tax planning, for just one example, uh, tax planning personally, but when you have a pass-through entity like a sole proprietorship or an S corporation, that’s really… Sure, it’s a business, but it’s being passed through to your personal 10-40. So, it’s, it really is one relationship. And we’re consulting on, “Hey, these are the things that we think that you should be doing. Hey, the tax code is going to change in 2026. Maybe we should be contributing more to a Roth solo 401k this year to realize more in taxes now, but we know that your tax rate’s going to go up in two years, three years. Alright, let’s try to fast track some taxes today and then we’ll move back to pre-tax two years from now when you’re in the 30 or 35% tax bracket.” So, that’s from a business consulting side of how we’ll try to get involved there.
Dave: What’s kind of the inflection point where your services kind of make sense? You know, usually people have to kind of be making like a certain amount of money to justify, you know, the expense and to feel like there’s enough to be optimized. Um, so when once you, you know, but at the same time, the earlier someone kind of gets in with you, they build a relationship, you learn their business, you come to understand, you know, the ebbs and flows. What’s kind of the right time when someone needs to be thinking about, “Oh, I should really be getting working with a professional here”?
Ben: It’s a good question because I think there’s probably like my thought on it, which is hey, as early as possible. Like, that’s just the best answer, right? Is like, obviously, that’s what I’m gonna say. Typically what happens is something happens. There’s a trigger point where maybe there’s a… an insurance need for something that the business does and either they’re sued or wow, they get this huge tax bill and they’re trying to call their CPA and say, “What just happened?” The CPA does a really good job of doing tax work for that specific year but not doing, you know, forward forecasting or something proactive. Typically, there’s something that happens that has them reach out in the first place. And that answer is like a wide variety. And a lot of times, I’ll tell you, the most common is probably compensation-related. When there’s the income goes up and somebody’s like, “What do I do with all this money? And what happens if next year, this same thing doesn’t happen? Should I just be sitting in cash? Is there a better return? I can’t take too much risk. I might need this money.” It’s like a lot of it’s that decision-making that we’re walking through. And that answer is so different for everybody because everybody has different feelings connected to all of those decisions. “Hey, Dave, you might be more comfortable with taking more risk and having only three months sitting in cash. Somebody else is like, I’ve been down this road before. I need 12 months of cash to feel like I could sleep at night.” I know that’s not optimal for investment performance, and what we would say is then, that’s the right answer. The right answer is 12 months. Get your night’s sleep, and we’ll… We’ll let’s do planning around that all day. So, it’s… It’s that… That’s how things like ebb and flow, but compensation is a big one.
Dave: I like that sort of optimizing a little bit for, for, you know, the emotional side of things because at the day, like, yeah, if you’re not comfortable with only a three or six-month runway, uh, then what was the point of, like, earning a little bit of extra interest or whatever it is? You know, what are some of the common mistakes or oversights that people make? I mean, you know, we’ve talked about, like, estate planning in previous conversations. So, maybe that one’s up there. But what are some of the things that you kind of see people just really dropping the ball on when they, when they first talk with you?
Ben: The one area that we typically see a miss on is insurance. We don’t sell insurance. Sunpoint doesn’t, which is, we operate as a fiduciary. So, we’re always in your best interest, which gives us the most objective lens to go out and help you find the right policy. And typically, where that is, is disability. Saying, like, “Alright, you are an entrepreneur. You own your own business. Great. What happens if something happens to you? Like, we have an HVAC client who owns his own HVAC company. What happens if you broke your leg? Like, how do you sustain life when your business… like, you have clients. What’s the plan here?” Disability is a big one. We work with a lot of young families, so life insurance is always really important, especially, you know, Dave, we talked about this yesterday. It’s like, you have kids. You have young kids. It’s like, alright, if you have a solo earner that’s the business owner, then the disability and life insurance is crucial. But the life insurance just isn’t crucial for the business owner because they earn the income. Your spouse has an incredibly important role. You know, for me, I take my wife out of the situation. Even take her, you know, forget about the income. Her role as a mom has to be replaced. How do we… I need to get the kids to daycare more often. Alright, so there’s an added expense. Like, helping think through… they’re not fun conversations, obviously, but they’re, you know, they’re required. We see these examples every day of, you know, people passing young, heart attack, hit by a car, whatever it is. And you have to have a plan in place to protect those loved ones around you. So, we see that those are often misses, business policies as well. You know, when to buy one, when not to buy one, is those are the things that we’re helping you think through. But disability and life insurance are often misses for most of the young entrepreneurs we work with.
Dave: Yeah, that’s uh, that’s very interesting. You know, I frankly, I recently got life insurance, maybe within the last year or so, um, after kind of, you know, uh, living without it and just sort of hoping for the best. Yeah. Things change when you have a couple of kids and stuff like that. But, you know, to your point, disability insurance wasn’t even on my radar. You know, I kind of think of that as something like that like a doctor needs or something because, uh, you know, you think of like, uh, they work with their hands or, I don’t know, things like that. I computer work. I don’t think about so much. If I break my leg, I’m basically fine. But there’s many things, I believe, that can happen. You could have a stroke or something, I suppose, where you are not dead and therefore you would not qualify for your life insurance policy, but you are unable to run your business and maybe earn money. So, I guess are those types of things that maybe we also should be kind of thinking about?
Ben: Yeah, I mean, that’s actually how we end our, like, initial conversation when we start to, like, organize somebody, like, somebody’s life around the calendar, cash balance sheet. We talk about, like, “Hey, that’s your base case. That’s how you’re living your life today.” We talk about the scenarios and what happens if you get sick, what happens if you get sued, what happens if you die before you expect, what happens if you live longer than you expect. And typically, if we can build a moat around those four alternate scenarios, you’re covered for most things to go wrong in life. And yeah, disability can be one of those things that, like, for you, you’re on your laptop. Hey, as long as I can, you know, I have the brain function and I can operate with my hands. And now with some of the technology, you probably don’t even need hands today to do a lot of stuff, is okay. Great. But so maybe for you, the disability need would be lower. For somebody else, that again, we’ll go back to the HVAC example. Alright, you need to be able to, like, pick up heavy units. Like, a blown shoulder through, like, ruins your career, ruins your business. Like, let’s just put some things in place that are somewhat inexpensive and just… Just to make sure that you’re covered.
Dave: It, it, yeah, it makes sense. It’s… I think it’s sound advice. You know, I found life insurance in general just to not be that expensive. I mean, you know, I understand the insurance company has a model that will make them money, and that’s understandable. But, like, for a relatively modest, like, monthly payment, like, you’re protected against the worst. So, it does just kind of, like, make sense, right? Um, estate planning, you know, is a topic I know that, you know, we had discussed wanting to kind of get into, and again, my, uh, potential ignorance here will maybe show itself, but I think of estate plan as kind of, like, uh, like how you pass on your assets, like, after you die. And estate, I think, of as, like, as a home, but I don’t think that’s really what it means. I think it’s all-encompassing. So, tell me a little bit about how we should be kind of thinking about that in the conversation.
Ben: So, I would say how you’re thinking about it is like the traditional sense of thinking about estate planning, and most people associate estate with wealth. Those are two common phrases that are somewhat synonymous, and most investors and most people in our society think that, like, hey, maybe when I have, like, $3 million, I’ll start to put the estate together and… And get some planning done. But really, there’s components to your estate plan. The most basic is having a living will. And we say, like, hey, everybody should have one of those. But the reality is most people don’t. But that’s just one component. Okay, you have young kids. Who’s going to be the guardian if something happens to you and your wife? Again, not a fun scenario to talk about, but whoever that guardian is, like, you want to pre-approve those individuals to take care of your children. Sure, the courts still going to be involved, but you want to have a document submitted to the court, signed by you and your wife, saying, “This is who we think is best fit.” So, guardianship, living will, and then your healthcare proxy. You know, if you were on… You’re in the hospital. Who do you want to be making the decisions if you… You know, not able to make the decisions yourself. Like, okay, maybe your wife, uh, but if somebody doesn’t have a spouse, okay, who do you want to make those decisions on your behalf? Do you want the doctor to be able to do that? Want somebody to consult the doctor? How do you want this to play out? When do you want life-preserving support? A lot of people that we talk to will say, like, if I’m in a vegetative state and I’m not coming back, let me go. Just like, let me go. And it’s okay. Let’s… It’s a highly emotional decision that you’re making. It’s also now… Play this out in real life. Your spouse is… is sitting there in the hospital. Now, you have to make that decision, but you’ve never had the conversation. Most people would say, “Keep her alive. Keep him alive. Keep him alive.” Like, okay, but maybe that’s not what they want. So, making some of these decisions while you’re in a different emotional state is so powerful, and you just pre-plan this stuff. And then the last part is your… Your financial power of attorney. And that’s just to say, like, okay, well, how do bills get… Like, unfortunately, you still have to pay the mortgage. The mortgage, the bank doesn’t really care that you’re in the hospital. Like, you still have to pay the mortgage. Somebody needs to be able to log onto that account and make that payment for you if it’s not on autopay. So, selecting those people ahead of time. And, I’m sorry, the last part, that, you know, if you have a trust-based estate plan, you, you know, may want to set up a trust, especially if you have young kids. Um, making sure that, hey, our life insurance policy shouldn’t go to our children that are five and eight years old. Most, you know, states aren’t going to let that happen. So, how do we make sure that they have access to that money with their new guardian? It’s… We’re helping you think through that entire process. Again, I can’t say it enough, Dave. It’s not a fun conversation. Like, my wife, we have young kids too, a three and a four-year-old. Like, sitting down, it’s a tough conversation to pick a lot of this stuff, and you’re like, man, I’m 32. I’m sitting here deciding how I’m gonna die.
Dave: It’s heavy. It’s heavy, really. So, you know, so you guys, you gotta have that conversation. Someone’s got to kind of do it. Um, you know, all the things that you’re mentioning with respect to, you know, estate planning, insurance, life, disability, etc., you know, are there specific nuances with respect to kind of the variable income clientele that that you deal with? Or is that more or less kind of standard like, “Hey, you’re a human being, you’re aging,” and it’s more or less kind of the same, same deal, you could say.
Ben: You could make the argument that, like, sure, in my opinion, 100% of people should have an estate plan, and everybody does. You just maybe didn’t control it. The court’s going to decide whether you decide, you know, that’s… That’s up to you. But the variable income component, it… It triages into all of those categories based on income going up and income going down. So, the life insurance need, what we typically do is we err on the side of safety with those with variable income. Okay, if you’re bringing home between 1 and $400,000 a year and then great, you have that seven-figure year. Alright, maybe we should have… If you start to have lifestyle creep, you went from driving a Honda to driving a BMW, you bought the bigger box to start living in. Like, “Hey, we need to start to make adjustments to some of these policies as your income is rising.” So, it all… It all does have an impact. Where the impact actually lies is unique to each client individually, but broadly speaking, everybody should really be having these conversations on health insurance, life insurance.
Dave: Insurance makes sense. I get the sense that, you know, the more variable your income is, you know, the more likely maybe these policies are going to go out of date and how relevant or useful they are to you. Not that they will literally expire, but that, you know, someone with a more standardized trajectory like that policy could be good for decades. Um, awesome, man. That was a great… Just, you know, great conversation about… Yeah, topics that, yeah, not everybody thinks about every day, but we kind of all should be. Um, Ben, for people that want to, you know, learn more about you, your services, just get in touch to, you know, uh, have a conversation with you. How can they best do that?
Ben: Yeah, I mean, you can go to sunpoint.us. We have a landing page that just talks about our process. If you’re on LinkedIn, I mean, just search Ben Ben Tuscai. You can find me there. Those are probably the two easiest ways. We have a, um, contact form on our website as well. So, that’d probably be the easiest way to go about doing it. But Dave, really appreciate the opportunity to chat with you today, man. This was fun.
Dave: Yeah, absolutely, Ben. You know, I hope the conversation was, you know, informative and maybe a little thought-provoking for people, you know, out there. Again, thanks for taking the time, Ben. And, uh, yeah, I guess that’s it.
Ben: Awesome. Thanks, Dave.