Let’s be honest. Most of us who are starting a business, really do want to make money. That doesn’t mean tons of money, but we do want to make money. We want to have a life that’s different than what we grew up with, and we want to give our kids and families more than we ever dreamed of. The problem is, numbers are scary, revenue is taboo, and we don’t know how to manage it well. I am thrilled to have sat down with Echo Huang. She is a wealth builder. She’s fantastic. She’s took a dive deep into wealth building strategies that we can use, not only as women, but as entrepreneurs to grow, scale and build the life we want.
I am so stoked for today’s guest, because we’re talking all about money and how to build wealth. Welcome, Echo!
Hi, my name is Echo and I’m so pleased to be on the show!
We’re thrilled to have you! I’m super excited for this conversation. Anybody who’s been a listener knows, I’m all about helping people grow. I want to know – how do we build wealth? Why aren’t we taught this? How come we’re afraid of it? I think you’re the perfect person to start this conversation with. Can you tell us a little bit about your background and what you do? I think that will shine the light on why you’re the perfect person for this conversation.
All right, well, I came from China at age 20 with $100 in my pocket. I studied finance and accounting in college here. After I passed the CPA exam, I worked for KPMG, one of the largest CPA firms in the world in downtown Minneapolis for almost four years. I worked as a senior tax specialist helping many corporate executives and wealthy families to prepare tax returns and tax planning. I decided to change my career in 2000 to become a financial advisor. So that was a major turning point for me to leave a safe and secure profession to go out on my own and say, let’s try to tell people how to manage their money. I was 29 years old. As a Mormon minority and a new immigrant, personal wealth management is not something most people would try. But I made it. It was not easy to make it in the industry. I have learned a lot about how to manage my own finances in order to make it. So, in 2003, I started my own business with LPL Financial, and then three years later, I was managing $20 million for clients. After my daughter was born 15 years ago, I merged my firm with another smaller firm in Twin Cities as a partner there for 10 years. Then five and a half years ago, I decided to leave that practice and start Echo Wealth Management. An investment firm in Plymouth – just West from Minneapolis. My team and I manage more than $120 million for about 80 clients. I’m excited to share my personal journey as a business owner. So, my short story is, I’ve probably encountered most challenges your listeners have encountered. This is not my first business, in fact, this is my second on my own. But I think this time, I have built up a better network. I also believe I’m older and wiser this time, but I still make mistakes.
I love that. One thing I know that comes up for a lot of women that I’m working with, is that we come from two sectors. We’re afraid to look at the numbers because we don’t have very many numbers – whether that’s looking at your metrics, your business, or even your revenue. We don’t have enough, so we just don’t want to look at it. We have a lot stuff coming in, but we have no idea what to do with it. Can we talk about both of those things?
I think as a business owner, you have to have the basic understanding of cash flow. Meaning that even if you don’t like numbers, you still must have a big picture number. When we start building a business plan, it can be as simple as two pages. You just need to understand how you generate income and have an understanding of the fixed expenses that go out. Based on this, you can make decisions on discretionary spending. For anyone who is a business owner, you need to work with an expert if you’re not very good with that. I always tell people that I don’t expect every entrepreneur to have financial training such as accounting or finance to start a business. But they do need to understand that most of these successful companies have CFOs. As you get started, you may not have the money to hire a full time CFO, but you should think about getting that financial advice to get you through the first three years. Many companies fail in the first three years. I see myself as the personal CFO. Meaning that my clients may have a full time CFO that runs their business, but they may need assistance on the personal side. They may need somebody to oversee their own investments, taxes, insurance and estate planning. In terms of a company, work with a trusted tax CPA to give you that initial understanding. This will help your business plan with numbers that you can understand. As you go, continue to review and set goals to see how you’re achieving them. So, you may need some services such as bookkeeping or a good banker. When we face any market crisis or something like the current Coronavirus crisis, it’s important to have line of credit to ensure your business can continue when revenue doesn’t come in as usual. Having multiple professionals work together to help you maintain your business is important.
Part of my role is to actually connect those professionals and create a dream team for my clients. I think it’s just important to know the cash flow and then set goals. Then, you can leverage that to make it work when you don’t have enough revenue. When you get to a point where you have additional surplus, you need to know the taxes. So, don’t forget, you need to do some estimated taxes. Then, you need to set goals for short term, intermediate term and long-term. I think for a lot of business owners, if things are working well and generating profit, you are able to take some of that distribution. I would definitely suggest having at least six months of living expenses as an emergency fund. That means it needs to be in something that’s very secure. Things like online savings accounts don’t have as much interest than some banks. But then after that, I think you can consider setting up some type of retirement plan for the long-term saving while reducing taxes, such as a 401k or a SEP- IRA. I would also suggest starting to look for the right type of financial advisor. Some people are comfortable doing this themselves, but some people are not. Some people want to have someone who understand them, well and guide them through the process.
This is why I decided to write a book! The title of the book is “Own Your Future.” I have a specific chapter about how to create your financial dream team. This dream team includes a trusted financial advisor, a tax CPA, an attorney banker, mortgage consultant and insurance agent. These are the professionals who should be working together to assist you. I don’t expect somebody to know all these intricacies of tax laws, insurance and everything. There are three reasons why I decided to write this book:
- To educate and inspire more people to start planning now to own their future.
- To review how wealth management is done by a fiduciary financial planner. We as fiduciary financial planners, must follow the standard to look out for the best interests of our clients. So that reader can decide how to choose the right one to partner with.
- To encourage more women to choose this profession and to address women’s unique challenges. Very few women choose this profession. I think part of this is because traditionally, people think a financial advisor, they traditionally think men are better. But in reality, that’s not true. We simply don’t have enough well qualified financial advisors to serve women. I see that as one of the challenges.
It’s so important for people to understand how to plan and save for their retirement. So, I call it “Financial Independence Day.” That is the day you can make your work optional. It’s not an age thing at all. Some people can achieve financial independence at 45, some people 65 or 75. So regardless where you are today, you can start a plan to get you there. I mention a tool in my book – we call it the “Echo Dashboard.” It is a financial planning software tool, where you can see cash flow projections year by year to age 95. you can track everything in one place, and project your net worth year by year to age 95.
There is one chapter I think is really important to talk about – it’s about how to overcome behavioral biases. Remember, we are human beings. We make emotional decisions. Especially when we talk about investing. This market crash in the spring was not a great experience. You have to check your own behavioral biases and decide how to overcome them, so you don’t make a mistake based on fear. I’ve made my own mistakes too, even as a professional. It’s important for me to share with examples of what kind of biases people can identify, so that they can avoid those mistakes.
So, if you have your personal finances set up well, and your business is profitable – is there anything else that we should be thinking about? Whether it pertains to profit or handling money, is there something more we should be considering that we haven’t talked about yet?
Yes, and it really depends on your business structure as well and your plan for your business. Are you trying to grow as big as possible? Or are you just trying to keep it smaller and maximize the distribution for yourself to put on your personal balance sheet? For my business at this moment, I am the only owner. At the moment, I have a large business line of credit. I don’t want my business to have that kind of risk in case I need more money to make the payroll because I still have the line of credit to tap into. So, I think when you make a profit, it is important to set aside some part of the profit as a reserve for the business development plan. Depending on each business, some businesses actually really need a bigger reserve. I think for each business it’s important to look at the tax planning and analyze your growth plan. I would also make sure the business has enough insurance coverage into the liability. That’s why the insurance comes into play for every single business – to reduce liability. And then for the tax planning side, based on how much the profit you have in the gross plan, you should think about how fast you want to grow and how much you need to set aside or invest back to the business. I would say each business is kind of unique in its own way, but certainly think of protecting your business with proper insurance so it’s not at risk. You have to have enough emergency funds to get through the tough times. That’s always important. Make sure to work with your tax CPA to do the tax estimates and make the distribution. If it’s a pass-through entity like my company, the profit is going to be passed through to the shareholder and reported on the shareholder’s individual tax return. I think those are the key for business to be really well organized.
You’re blowing my mind. Okay, so the other question I have to ask – is there any role models that you look up to, or you’ve looked up to in your own personal journey that we should know about or follow?
I don’t have a particular one for you to follow. But in terms of my personal journey, I would say I have read so many books by different experts and have attended different types of conferences to learn from different experts. I think for myself; my personal role model was an author named Echo Chan. As you can imagine, I took her name. She was an author from Taiwan who traveled to more than 50 countries and wrote about how people live in Europe and in the US, and even in the Sahara Desert. When I was in China as a teenager, I read all her books and I would dream about traveling just like her. I think my advice to people is, as you go online nowadays, there are more and more people who write blogs now – including myself. We want the content to be relevant to people so that they can learn about financial planning now, so it doesn’t become too overwhelming. I think my message in the book is that wealth management is complicated, but it doesn’t have to be. What that means is if you choose your trusted financial advisor, and work with that person to create the Dream Team, then you can focus on what you do best. I think as a marketing consultant, you know that you want to work in what you’ll also have genius. I would say I would ask people to read more, follow someone online or get a book and read it.
I love it. This has been so amazing. I just made this decision during this conversation that we’re going to do Echo’s book as part of our book club for September, in the #girlboss book club. This is definitely one of the books we need to read. So, guys – we’re going to go and get “Own Your Future” for the book club, I’m super pumped about it! But where else can we follow you? Where do you hang out?
If you are interested in my business, you can go to echowealthmanagement.com. On the personal side if you go to my website, you can connect with me on LinkedIn, Instagram, Facebook and Twitter. I am quite active on LinkedIn, so please feel free to send me messages. If I cannot help you directly, I can probably point you to the right places.
All these links she just mentioned are listed below, so you can just click straight on over to those sites. Echo, thank you so much for being our guest today.
Thank you for the opportunity. I really enjoyed our conversation!
I was really stoked about this conversation. You had so many little tidbits you just threw in there that were blowing my mind. I’m sure this helped many people think differently about the money they make in their business. You really highlighted how to think differently about investing, paying yourself and what your business should look like to be really successful, and have that “Financial Independence Day.”
Thank you again, Echo!
Connect with Echo:
Facebook | LinkedIn | Instagram | Twitter
About Marketing Magic:
The Marketing Magic podcast is where women entrepreneurs trying to do all the things come to get inspiration, business strategy, and on-air coaching on how to get their business noticed and growing. If you have a business that people need to know about in order for it to grow, you’re in the right place. This is the place to uncomplicate your marketing. Be sure to listen, subscribe, and leave a review! Join the conversation of other unapologetically successful women in her Facebook community, The #girlboss Club.