How a former Eckerd’s drugstore cashier became major player in the financial services industry

Kenny Baer was featured in Atlanta Business Chronicle's "Meet the C-Suite" which features some of the city's most high profile c-level executives.

December 6, 2017

Phil W. Hudson

Staff Writer 

Atlanta Business Chronicle

Welcome to Atlanta Business Chronicle’s “Meet the C-Suite,” where each week we will feature one of the city’s most high profile c-level executives.

This week meet Kenny Baer, managing partner of Marietta-based Baer Wealth Management.

  • Name: Kenny Baer    
  • Company: Baer Wealth Management
  • Title: Managing Partner
  • Headquarters: Marietta
  • Background: I started my career in the financial services industry straight out of school. I briefly exited the financial services industry to work on the financial side of professional sports.
  • First Job: I worked at Eckerd’s Drug Store as a cashier in the same office park where our company is located today.
  • Education: Sports Management/Minor Business from Elon University; Certified Financial Planner degree from Oglethorpe University
  • Residence: Roswell/East Cobb 

Business Strategy

How’s business: Business is great. We have had year over year growth of more than 25 percent in the last 5 years. Our client base continues to grow and we are also growing from a hiring standpoint.

Biggest challenge for your business: Sustaining our growth rate regardless of stock market performance. The challenge in our business is educating clients so they have realistic expectations of what to expect from their accounts. We are a firm that refuses to sell people a bill of goods. We pride ourselves on telling our customers the truth about what they can and should expect from us. In our industry, we often combat competition who essentially try to tell clients that they can predict the future. 

What’s going to change at your company in the next year: We are looking to expand through acquisition and I expect to make our first acquisition before the end of next year. 

Company goal yet to be achieved: Creating a sustainable marketing campaign that leads to a consistent and predictable inflow of the right type of prospective clients.

Management philosophy

Guiding principles for good management: I believe that the office should be a fun place to be. You spend as much time at work as most anywhere else so we are always working to create a culture and an environment where people can be effective and happy. That is not only better for the staff but also for our clients. I like to give our staff the opportunity to better themselves via education, or any other ideas they have that can help them further their own careers. Ultimately, I think that is just better for them, their families and also for our firm. I believe that a collaborative environment is a thriving environment. Asking for advice and getting everyone’s thoughts and opinions helps build a strong team.

Best way to keep competitive edge: Staying educated on what is available financially to best serve our clients. Essentially you don’t know what you don’t know. So, we try to stay abreast of the best available options and strategies for our clients. The world is constantly changing and I see it as our duty to best serve our clients by being informed about what they can potentially do to reach their goals. 

Why people like working for you: I try to accentuate my employee’s positive attributes and put them in a position to succeed. 

Most inspiring entrepreneur: I don’t know if I would specifically call this person an “entrepreneur,” but I think Jim Carrey has an incredibly inspirational story. He wrote himself a $10M check years before he had made it as an actor and had enough belief in himself that he was one day going to be able to cash it. He also learned from his father that you can fail doing something you settle for, so you might as well go after your dream. If you fail, fail at doing something you love. 

I also admire John Paul Dejoria, founder of Paul Mitchell. He had found success but then lost it all and even lived in his car for some time. But he bounced back with only $700 to his name and grew his business into the billion-dollar company that it is today. His story reminds me of a favorite line in my favorite poem: “If”, by Rudyard Kipling: “If you can make one heap of all your winnings, risk it on one turn of pitch and toss, and lose and start again at your beginnings, and never breathe a word about your loss.”  

Judgment calls

Best business decision: Purchasing the practice from my father at a time when I did not know whether or not I could really afford to do it. Having the belief in yourself that you can just make it happen. I included many of the lessons I learned as an entrepreneur in the book I recently wrote, “One Shot.” It offers strategic and tactical advice to entrepreneurs and small business owners who are ready to sell the companies they founded.

Hardest lesson learned and how you learned it: Patience, and trust that things will get done. I can expect things quickly but if something is ten deep on a to-do list, then I need patience and trust to accept that eventually it will get done. I’m still learning it!

Toughest business decision: Hiring, when to hire, whether to hire internally or to outsource, etc. It is never clear cut what the right move is.

Biggest missed opportunity: I wouldn’t say it was a missed opportunity, but I wish I would never have left the industry for the brief time I did. It was a learning experience so I can’t say I regret it but that departure just delayed the success that we have today. 

True confessions

Like best about job: From an internal perspective, I enjoy working with our staff. We have really talented and great people. In regards to our clients, I like helping them solve their problems and acting as their personal CFO. It is very rewarding to implement a strategy for a client that puts them on a track to achieve all their financial goals.

Like least about job: Keeping organized and detailing notes from conversations I have.

Pet peeve: People who just ignore you or don’t respond. We often joke that we should just send the spouse flowers and tell them we are sorry for their loss because the only rational reason they have not responded is they are dead. 

First choice for a new career: I would probably be an actor, writer, or standup comedian.

Predilections

Most influential book: Unbroken, the Laura Hillenbrand book about Louis Zamperini. A true story about a man who survived the most incredible hardships and was able to rebuild his spirit. A true inspiration and an American hero. 

Favorite cause: Children’s Restoration Network. They help support homeless children throughout the Atlanta area. Over the last couple of years, we have donated more than 500 toys to their organization through multiple initiatives including our annual Holiday Toy Drive. 

Favorite restaurant: Little Alley in Roswell: Great steaks and a great bourbon selection.

Favorite way to spend free time: I enjoy spending time with my wife and children doing something fun. My daughter, Sunny, who is 5, and my son, MJ, who is 3, are up for most anything but my daughter has especially enjoyed indoor rock climbing, and my son loves going to the golf course. I enjoy being with them where they are burning off energy! 

I personally enjoy exercise, college football, and playing golf. It depends on the day in which order I prefer those. It really just depends on how well I am playing golf at the time!

Favorite music: I have extremely eclectic taste, after just glancing at my music list, I see Kid Cudi, Hank Williams Jr., Bill Withers, Taylor Swift, and the Grateful Dead. 

 

 

Cobb experts: Average resident will see lower taxes

Kenny Baer was featured in an article in the Marietta Daily Journal, providing insights about the recently signed Tax Cuts and Jobs Act.

Marietta Daily Journal

www.mdjonline.com

Ricky Leroux

December 21, 2017

Experts around Cobb say most residents will see a reduction in their taxes under the new tax law passed by Congress this week.

The tax law, expected to be signed into law by President Donald Trump early next year, reduces the tax rates for most of the seven federal tax brackets and nearly doubles the standard deduction, among other provisions.

“The average taxpayer is most likely going to save a little bit of money because their rate is going to be reduced by whatever bracket they fall into, and raising the standard deduction will probably make it easier for the average Joe to more simply file their tax return,” said Kenneth Baer, owner and managing partner of the east Cobb financial planning firm Baer Wealth Management.

Taxpayers have the option of taking a standard deduction or itemizing individual deductions when they file their tax returns. By increasing the standard deduction and limiting other deductions, such as a deduction for state and local taxes, the number of taxpayers who itemize is likely to decrease, Baer said.

The balance between the reduction in tax rates and elimination or capping deductions will likely result in a lower tax bill for most people, but every case is different, explained Roger Tutterow, economics professor at Kennesaw State University and director of its Econometric Center.

“It’s going to depend on what their household looks like,” Tutterow said. “I think most individuals will see their taxes come down, and clearly, it’s not just the tax rates that changed, it’s, for example, there’s a higher child tax credit, there’s a higher standard deduction. Some exemptions or deductions are going away. For example, the ability to take off for paying state and local taxes has been capped now. … So you may make out better in terms of having a lower marginal tax rates, but some of your deductions may be eliminated or capped. So it’ll be interesting to see.”

The amount of the reduction in taxes for middle-income taxpayers is unlikely to be life-changing, Baer said.

“Your average Joe, in my opinion, and this is just my opinion, it’s not going to make much difference in their lives,” Baer said. “They’re going to pay less, which is good, but it’s not a big difference maker.”

The balance between lower rates and limited deductions may not swing in favor of some higher-income individuals, according to Dan DiLuzio, CPA at Henssler Financial, which has an office in Kennesaw.

“I’ve got a lot of clients in the upper brackets,” DiLuzio said. “They may not see as much as they hoped they would see because their itemized deductions are going to be limited, particularly when they’ve had high real estate taxes or high state income taxes, that’s going to go away. And then their tax brackets haven’t really decreased as much as some of the other brackets have.”

Jean Hawkins, managing partner at Hawking, Moore and Cubbedge, a tax planning and business accounting firm in Marietta, went further, saying most of her high-income clients will see higher taxes as a result of the bill.

“Even though the standard deduction has been doubled, the personal exemption is gone and the state and local tax deduction has been capped,” Hawkins said. “I think those things are not going to make up for the fact that the brackets have been lowered slightly. I think that’s not going to net out for most of our clients.”

An analysis by The Tax Policy Center estimates that all income groups will see a reduction in taxes in the short term, however.

“Compared to current law, taxes would fall for all income groups on average in 2018, increasing overall average after-tax income by 2.2 percent,” the analysis reads. “In general, tax cuts as a percentage of after-tax income would be larger for higher-income groups, with the largest cuts as a share of income going to taxpayers in the 95th to 99th percentiles of the income distribution.”

Many of the benefits in the tax bill for individuals will expire by 2027. Republicans in Congress had those provisions sunset in order to pass the bill with only 51 votes in the Senate through a process called reconciliation, Tutterow explained.

“One of the dynamics that’s playing out though is that a lot of the rhetoric is saying, ‘Well, individual income taxes may come down, but there’s a window on how long those lower rates apply. And in the future those rates will go back up.’ And of course, that was done as a way to get the bill through the Senate,” Tutterow said. “By sunsetting the lower individual rates, it allowed them to pass the bill and still come in under the rules of reconciliation.”

Tutterow said the decision to put an end date on the individual portions of the tax bill while making the corporate tax benefits permanent was a calculated move by Congressional Republicans.

“I think there’s a calculated bet being made that Congress will extend lower tax rates for individuals in the future,” he said. “I think the sense was if they’re going to cut the corporate rate, now’s the time to do it permanently because they have the votes. Several years down the road, Republicans may not be in the majority, and then a lower corporate rate might not survive if it were sunset. So I think that’s why the corporate rate was made permanent, while the individual tax rates remained with a sunset provision.”

BUSINESSES

The largest cuts in the tax bill are for corporations, and Congressional Republicans are betting that putting more money in the pockets of business owners will lead to higher wages, more jobs and increased investment. Whether or not that will happen remains to be seen, Tutterow said.

“One thing we have to remember: it’s easy to say the business owner is better off,” Tutterow said. “We need to remember that for large businesses, we’re talking about stockholders. We’re talking about people who own stock in the company. They’re the beneficiaries. Now, whether the additional after tax income will be used to hire more people or be used to invest in capital equipment to grow the enterprise or whether it will be returned to shareholders is somewhat an open question. Therein lies the real question mark about how stimulative the plan is for employment and investment.”

Wage growth depends on several factors, including the availability of labor and productivity, he said.

“It may be unpopular to say this, but businesses hire people and businesses give people raises because they need to,” Tutterow said. “The reason we see wages rising is it’s necessary to attract and retain the workers you need. So I think that’s an important consideration. I don’t think that just because businesses find themselves with additional after-tax profit, they necessarily go hire more individuals. They’re going to find themselves with more after-tax profit and they’re going to decide to move into new markets or launch new products to grow the enterprise, and that’s why they hire new people.”

Baer agreed, saying business owners will do well under the new tax regulations, and more money in their pockets could lead to hiring more people, new technology being developed and higher wages.

“I think that’s the idea behind it. Whether that turns into reality or not, we don’t really know. … The overall theme is if you’re a business owner, you have the potential to seriously negate your tax liability. It depends on the kind of business, it depends on how you receive your income, but there is a lot of potential there to lower your taxable income or what you’re paying in taxes as a wealthy — a business owner who’s doing very well.”

Manufacturing is one industry that could see growth as a result of the tax changes, Tutterow said.

“That is one of the sectors that there’s some hope that the lower tax rates will improve profitability for domestic production. We have seen an outward migration of production moving to Mexico, Central America and to Asia. And there’s a lot of trends now that are allowing us to be more competitive at bringing production home. And certainly lower tax rates on profits could contribute to that,” Tutterow said.

BWM and Children's Restoration Network Toy Drive 2016

For the last several years, Baer Wealth Management has supported Children's Restoration Network (CRN) through a number of initiatives. Through various programs, CRN helps homeless children receive basic necessities from food and school supplies to adult guidance and scholarships. Through this toy drive, Baer Wealth Management was able to aid them with this mission. Over 200 toys were donated to homeless children in Atlanta! 

Thank you to everyone who helped make this possible!

Does Borrow Lead to Sorrow?

Courtesy of David Hultstrom:

As the children get ready to go back to school, I thought I would take the opportunity to go back to basics in this newsletter.  While focusing on highly technical (and sometimes complicated) areas of financial planning is important, some of the basic items are arguably even more important.  Here are a few simple rules (in the interest of brevity I am leaving out a few exceptions that rarely apply, please see us or your financial professional for custom advice):

  1. Never borrow money for a depreciating item.  In other words, the expected value of the purchase in the future must be higher than the current purchase price plus interest and any other expenses.  The only items I think pass this test are prudent outlays for a primary residence, an education, or a business (including real estate investing).  In the “close but no cigar” category is borrowing for second homes for personal use (the appreciation will almost certainly not be high enough to overcome interest, taxes, insurance, maintenance expenses, etc.) and borrowing for majors at expensive colleges that are unlikely to have much-earning power.  If you have cash for the second home or the low-earning, expensive major, you have my blessing, though – assuming you have the rest of this list covered as well.
  1. Maximize tax-advantaged savings vehicles.  Save the maximum allowed in your 401(k), IRA, Roth IRA, etc.  Most people dramatically undersave – a range of 10% minimum to 25% maximum (if starting early) is prudent.  (Lower earners can be on the low end of the range because Social Security will replace more of their income, higher earners and those that are starting late should be on the higher end of the range.)  Not only is this prudent from a tax perspective, but the creditor protection these types of savings provide is important as well.  If you are retired your annual percentage spending from your portfolio should be (roughly) no more than your age minus 25 then divided by ten (so 4.0% at 65, 4.5% at 70, 5.0% at 75, etc.) of your initial portfolio value.
  1. Don’t change your investment strategy.  All too often when returns have been high investors want to increase the risk they are taking and when returns have been abysmal they want to reduce their risk.  Unless a life change (not market movement) has occurred that has materially changed your financial situation, leave your investment strategy intact.
  1. Have the right property and casualty insurance coverage.  For liability coverage, determine how much you could potentially lose in a lawsuit if you were found liable (retirement plans, and in some jurisdictions, a homestead, are exempt for example) and round up to the next million dollars (or two) to determine the amount of umbrella coverage you should carry.  Also, depending on your occupation or volunteer work, purchase D&O (Directors and Officers – if you serve on a board), Malpractice (if you can hurt someone’s body), or E&O (Errors and Omissions – if you can hurt someone’s money) insurance.
  1. Have the right type and amount of life insurance.  If you are still working my general recommendation would be term insurance starting at twenty times your gross income and declining to zero at your expected retirement age (you do this by tiering several policies).
  1. Carry adequate health insurance and disability insurance.  Group plans are better if available, but if not individual plans should be purchased.  Stay away from narrow plans (disease specific for example) and, of course, if you are retired, disability insurance is unnecessary.
  1. Get your estate plans in order.  Make sure you have an up-to-date will, durable powers of attorney (appointing someone to make decision – one for healthcare and one for everything else), living will (end of life care instructions), and letter(s) of instruction (documentation telling your heirs things they need to know).  Also, make sure the property is titled correctly and that beneficiary designations on insurance policies and retirement plans are as you wish (and check this if it has been a few years – people frequently misremember what they did).