The Liquidity Event Podcast: Episode 75

 

Episode 75: New Year, Same Me

It's the first episode of the year, dear listeners! AJ Ayers and guest host John Owens talk about the upcoming BKFi retreat, new year's resolutions, Binance's pending $1 billion acquisition of bankrupt crypto lender Voyager Digital, offshore (cruise ship) living, and the comprehensiveness of Secure Act 2.0. Don't miss the quick takes on the veritable bounty of information coming out of that! In other news, the Salton Sea has emerged as the center of the Lithium race, with competing companies seeking mining rights. And worthless NFTs might just be valuable as tax-loss harvesting vehicles. Who doesn't love a bad investment? Finally, you'll hear about why so many accountants are quitting, despite the exceedingly high demand for them. Stay tuned!

Read the Full Transcript:

Speaker:

This podcast is for informational purposes only and should not be considered tax or investment advice. Welcome to the Liquidity Event, a show about all things personal finance with a laser focus on equity compensation. Hosted by AJ and Shane of Brooklyn Fi, each episode will take you through the week's news on FinTech, IPOs, SPACs founder wins and fails, crypto, and whatever else these nerds think is interesting. Learn more and subscribe today at brooklynfi.com.

AJ:

Hello, happy New Year and welcome to the Liquidity Event. We're your hosts AJ.

John:

And John, [inaudible 00:00:40] One final time for Shane Mason on his little break.

AJ:

This is episode 75 being recorded on beautiful Wednesday, January 4th, airing on Friday, January 6th. Not a beautiful day to remember. How you doing, John?

John:

I'm doing pretty good. Back to work, back in the routine new year, same me. Let's go. Excited to kick off 2023 on the podcast here and excited to see you in person next week, AJ, out in Los Angeles.

AJ:

Oh my god, I can't wait. I'm really excited. Yeah, our whole team is heading out to Los Angeles, California, my hometown, and we're going to sit in a conference room and do some great planning. Looking ahead to tax season, we're going to bond with each other. We're going to do some karaoke. We're going to clean out the beach. It's going to be-

John:

San Diego, Santa Monica, I should say.

AJ:

San Diego would be very far. That would be not a good idea.

John:

A long Uber ride.

AJ:

We would have a mass exodus if they had to sit in the car with you for two and a half hours.

John:

I'll drive.

AJ:

Anyways, for those of you who are new to us, John is not allowed to drive at retreats ever again. We had actually a person quit over John's driving.

John:

No, that is not true. That is fake news.

AJ:

Anyway, no IPOs this week. So I think at the end of our last final 2022 episode, we talked about how abysmal the 2022 IPO market is with a slight dose of optimism for 2023, but nothing exciting scheduled for the moment.

John:

Not on the horizon yet. We'll see, we'll see. Things could perk up here in 2023 however, but there has been a lot of news to kick off the year and I'm just curious, AJ, before we jump in though, it's January 4th. Did you have New Year's resolutions and if so, are you still on track?

AJ:

I'm not a New Year's resolution person. I don't make them. However, I just do feel like this general energy reset by the calendar starting over, so I don't have any specific resolutions to track. I've been drinking more water. That's always a resolution.

John:

That's awesome.

AJ:

On my desk you can't see is littered with empty water bottles. I do reuse them by the way. I just like to use the plastic bottles because they're light and portable. Yeah, that's it. Nothing special. You're trying run what, 500 miles?

John:

No, I'm trying to run 1,000 miles and bike 1,000 miles this year. So I'm whittling away at that [inaudible 00:03:09].

AJ:

(Singing).

John:

(Singing).

AJ:

(Singing).

John:

We're we're losing. I can watch them take out their headphones and run away.

AJ:

Karaoke next week, perhaps. Got to bring my grand piano on the back of a truck to sing Vanessa Carlton's A Thousand Miles. Anyway, how many miles have you run so far.

John:

Oh my goodness. [inaudible 00:03:32] Sit in my car and listen to that song, have a good cry. But anyway, nonetheless, here we are, 2023 underway.

AJ:

Are you laughing at your own-

John:

I'm laughing at my own jokes so our listeners don't have to.

AJ:

Oh boy. How many miles have you run so far?

John:

That's a good question. I've run 11 miles so far and I've biked 19. I have a whiteboard over here where I'm tracking it. So 99 more to run. 981 more to bike. I also need to go to the dentist at some point, but that's the only other stuff board.

AJ:

I'm going to the dentist on January 18th. I booked it in October.

John:

I know. I'll probably go in July at this point.

AJ:

Anyway, speaking of pulling teeth Binance.US, let's jump right into it, is set to acquire crypto exchange, sorry, bankrupt crypto exchange Voyager's assets for one billion dollars weeks after their deal with FTX. We all know what happened with that deal failed. So Binance is coming in. Notably this is Binance.US which is a US subsidiary of Binance, which is a Chinese company, however... So this article this is from right before our break. This is from CNBC who was talking about the deal. However, because it's a Chinese company, US foreign trade commission got a little spooked. So there's been a bit of an update here that the billion dollar acquisition could be delayed or blocked by a US National Security Review according to a Friday bankruptcy court filing. What's interesting to me about this type of deal is because Voyager's in bankruptcy, all of these proceedings and the actual specifics of the deal are going to be public because it's all got to go through the bankruptcy court, because they're selling off the assets.

John:

Yeah, I mean it's very interesting. I mean, you just see this kind of consolidation in the crypto space continue and for a hot second, nobody really just kind of realized what was going on. For a hot second, FTX was the one coming in and buying up "bottom feeding" in the crypto space and buying up all this stuff. What we later found out is that it sounds like they might have been doing that with their customer's money, which is a bit of a problem.

And so I don't know, I think there's going to be a lot of scrutiny around these crypto acquisitions. A much higher level of scrutiny than there was earlier this year and due diligence. And then you layer in the fact, I mean, there's not much that Republicans and Democrats and Congress agree on and as I sit here right now, they're on a fifth vote to elect a Speaker of the House, it's about to fail. But they do agree that they're skeptical of business dealings with China and there's a lot of focus on that across the political spectrum at this point. Somewhat new Cold War of sorts, geopolitical foe type thing.

AJ:

Yeah, for sure. Speaking of geopolitical foes, we've got a 28 year old buying a cruise ship apartment because it's less money than renting a regular apartment on land would be and he gets to see the world. I think you actually read the... I only read the headline and I have some hot takes based on the headline, but tell me what's going on here.

John:

So yeah, so basically what it was was, he purchase a 12 year lease on a ship for 300 grand.

AJ:

Wait, so which ship is this? How do you this?

John:

I don't know. I think it's a new ship, like a new cruise ship. I don't even know if it's out there yet based on... The article left... I don't-

AJ:

A lot to be desired.

John:

Left something to be desired. I'm not sure if it was written by a Columbia journalism school grad. But anyway, so here we are basically 2,100 a month in rent effectively plus another 2,100 a month for the all inclusive services, which include food, drinks, alcohol, a gym membership, routine healthcare checkups, and onboard entertainment and laundry. I am like this close-

AJ:

I'm sorry, did you say routine healthcare checkups?

John:

Yeah.

AJ:

As in you don't need insurance if you-

John:

There's a freaking doctor there. Yeah. Plus you're in international water so you can do whatever you want. No, I'm just kidding. But this is genius. I'm freaking jealous that I didn't think of it in the first place because this is college all over again in some respects. You've got your dining hall nearby, you've got friends nearby, and guess what, if it's a cruise ship, you don't like the people. Well guess what? There's a new batch coming on next week, let's see if we like them.

AJ:

This article I just skimmed it is quite light and fluffy. I know an expert that we know who would love to talk about living aboard a boat.

John:

Shane Mason.

AJ:

Shane Mason. So while there are no IPOs, we're going to do a deep dive on cruise ship living and sailboat living-

John:

Cruise ship living.

AJ:

In our next episode, folks.

John:

If you're listening right now-

AJ:

He's not.

John:

Please prepare a sea shanty for this for us and sing us a fine little tune. But yes, the one thing I'm thinking about is this dude lives in San Diego.

AJ:

I had the exact same thought, John.

John:

And California and New York in particular, some of these other higher tax states, they are like clingy ex-girlfriends when it comes to breaking up with them and your tax-

AJ:

Or ex-boyfriends.

John:

Or ex-boyfriend, yeah, whatever. We don't discriminate here.

AJ:

They're very difficult to break up with. And so if this guy's smart, he would set up a tax [inaudible 00:08:38] residency somewhere else. Truly break up with California if he's going to be living on a cruise ship so that he doesn't end up paying California taxes the whole time. This is not tax advice. Talk to a tax expert, dude. But yeah, he's onto something here.

Just to be clear, so his mind, he is like, "Oh yeah, I don't have to pay taxes, I'm not in any country." It's like, no, you left California, your shit is in California. Even if you gave all your stuff away, California will come after your income.

John:

Yeah. So does he moved to Texas or Nevada perhaps, set up himself up there? Because I don't think this is actually happening for another year or so until... The ship is being built right now or something, finalized. And so you could tell I skimmed the article yesterday and it was already sparse on details. But yeah, you get out of California, you break up with California, you go to a different state, then you get on the cruise ship, you're still going to pay, if you're... Listen, you're going to be paying federal income taxes. And so I don't know if there's... Shane's more of a foreign tax guy than I am in terms of foreign earned income exclusion. Is there anything there? But he's not really settled in any spot if he's just kind of riding around. So I don't know if he'd be able to-

AJ:

Because that's the thing with tax domiciles is that he's not landing anywhere, he's still traveling. So your tax is the last place you left. If he went around the world, fell in love in Dubrovnik and settled there, that's where he would be taxed. But until he settles somewhere.

John:

So that's an interesting point that was on my mind when I was reading this article, which is like, this dude's 28, he's going to go live on a cruise ship for what? The next 12 years. Oh, you meet someone. Well, okay, well I'm a little tied up here, you know what I mean? Like, it's one thing to [inaudible 00:10:06].

AJ:

Yeah. But you meet someone on the cruise ship. That's the point.

John:

But then the next week they're gone. Which might be the lifestyle-

AJ:

But they're on the cruise ship with you too. They own the place next door and then you can combine them and upgrade to your three cabin deluxe-

John:

The honeymoon suite eventually.

AJ:

I mean, this is the idea of a retirement community. At a retirement community you have all the amenities. You have a gym, maybe you have a golf course, maybe there's a doctor onsite, there's a clubhouse where you can do social activities. There's bingo.

John:

I'd love to live in a retirement community.

AJ:

I do live in a retirement community and it is awesome.

John:

Yeah. Oh my god. This is the closest thing I can get to a retirement community right now where I live. But my God, I'm just here to get 55 plus.

AJ:

Speaking of retirement communities-

John:

Oh my god. What is with you with the translations here today? AJ is-

AJ:

I'm nailing the segues. Three for three bitches.

John:

AJ upped her segue game.

AJ:

That was my resolution-

John:

Her New Year's resolution.

AJ:

That I didn't tell you about because I knew you'd make fun of me. Speaking of retirement communities, Secure Act 2.0, you probably forgot about the first one, 1.0. Well Secure Act 2.0 is back with a vengeance. We've got RMDs, we've got 529 plans, we've got-

John:

We've got [inaudible 00:11:16].

AJ:

Roth IRAs, we've got a retirement lost and found, which is what I'm excited about. What's in this silly little bill?

John:

We've got Roth, a simple IRA, Roth SEP IRAs. We've got employer retirement account contributions that can be Roth now, we've got 529 to Roth. What isn't in this bill? So here's the other thing though that I'm a little uncomfortable with, AJ. The last time they passed a Secure Act, Secure Act 1.0, I spent two months digesting it and then COVID happened and nobody talked about it or cared because it was like, okay, the whole world's ending. So let's hope that this one lands a little bit better than the last version. But there's a ton of stuff in here.

We've got delayed required distributions for folks. That's the money that retirees need to take out. And so for folks that aren't familiar, basically in your pre-tax accounts, your IRAs, your 401Ks, at some point the government wants to get paid on those. And so it used to be that you had to start taking withdrawals at the age 70 and a half, which was really fun for AJ and I. We had to learn this when we're taking our CFP course because nobody celebrates their 70 and a half birthday. Then they changed it to 72, now they're changing it to 73 and then 75. This really only benefits rich people though, that piece. Because if you don't have a ton of money, you're already withdrawing from your account by then.

AJ:

You need it, yeah. But, I don't know. There was this particular article in Forbes was about this potential risk of a reverse nudge, which I thought was honestly a bit of a stretch. I mean, look, giving more flexibility in retirement accounts, I'm generally for if you've done the savings and you haven't touched it for your entire life. Also. Define the term rich people. If you have $500,000 in your 401K at age 60, are you rich? If you live till age 90, no you're not. All of this obviously depends on how long you live because that's how long the money needs to last. So if we all knew the day that we were going to die, we would know exactly how much we need to save for retirement. So anyway, so my-

John:

[inaudible 00:13:12] File for social security.

AJ:

My retirement advice is to invest in a fortune teller, because that's the most valuable piece of retirement planning is just knowing the day that you're going to die.

John:

I can't, I can't.

AJ:

I'm on fire today. Am I drunk?

John:

Are you?

AJ:

I'm drunk on water.

John:

What is that? That's great vodka. So what else is in this bill? The big one that I think that they nestled in here is the 529 to Roth IRA.

AJ:

I've been saying this shit for years.

John:

Back door.

AJ:

Years I've been telling-

John:

Why are you saying it? Why are 529 always going to get better? Because...

AJ:

I've been telling clients for years, your 529 dollars, put money in there. I don't care if you have kids or not, because there are a bunch of very, very wealthy, powerful people in government who have hundreds of thousands of dollars in these accounts for their very lucky grandchildren who are going to say, "Fuck you grandpa, I don't want to go to college." So there's all this money.

John:

I don't have to because of my trust fund, grandpa.

AJ:

I don't have to. Yeah, I'm just-

John:

Grandpa Mitt Romney.

AJ:

Going to start a crypto hedge fund. So there's all this money in there and no one can get it, I mean, you can get it out. There's a penalty, you pay taxes on it. So I've always been saying to clients, I promise you, I don't know what it's coming, but in the future, the use of these 529 dollars will be expanded and here we are. We have arrived.

John:

Here we are. It's AJ's day of New Year's vindication for AJ here.

AJ:

It's not vindication, it was some things you just know are going to happen. You just feel it in your... My fortune teller told me this was going to happen, actually. I don't have a fortune teller.

John:

Anyways-

AJ:

Anyway.

John:

How does this work? Basically saying up to $35,000 can be moved-

AJ:

So not that much money, but a little bit.

John:

Up to $35,000 can be moved from a 529 account to a Roth IRA. Has to be in the 529 account for 15 years, has to go to the beneficiary's Roth IRA. The beneficiary has to have not made Roth contributions and needs to kind of use up their annual Roth contribution exclusion. But here's the thing. So I just did some math this morning and I said, imagine that... I know it's been a busy day. I got my calculator and everything. So imagine that your kid's born, you put $10,000 for them in a 529 account. You grow it at 8% a year for 18 years and you never put another dollar in it. You'll have, let's say about $40,000 around the time that kid turns 18. You can in theory then start moving money into their Roth IRA and let's say that that child gets a job-

AJ:

Wait, back up. 10K a year for 18 years.

John:

No, 10K one time.

AJ:

Oh, one time.

John:

$10,000.

AJ:

Thank you, yep.

John:

Yep.

AJ:

Thank you.

John:

10K a year is lot more than 40,000.

AJ:

You scared me there. I was like, I don't know what calculator you're using.

John:

You should probably check some of the work I've done lately, AJ.

AJ:

Oh, no.

John:

I'm just kidding. So yeah, you have $40,000 in there, let's say at that point. Kids 18, let's say the kids started working when they were 15. The IRA contribution limit at this point will probably be $8,000, $9,000 a year. They don't put money in their Roth IRA. They're able to move over that $35,000 into a Roth IRA and then it's going to grow tax free for another 50, 60 years. This is a huge giveaway.

AJ:

This is great for us, John, as financial planners. This is just such a great no-brainer to be like, you got a kid who's 14? I've got a bridge to sell you.

John:

Yeah, I've got an idea. But here's the thing, there's a huge focus in this bill on Roth vacation in general. Basically saying, get incentivizing people to save more money to Roth accounts. Now there's catch up provisions now. So if you make, basically for older folks that are close to retirement, they can make catch up contributions with their income strategy to save to Roth. This isn't Congress being benevolent, this is budgetary math.

AJ:

No, they just want the money now.

John:

They want the money now and they're screwing future generations and they're screwing themselves later on because of all this tax free growth.

AJ:

Surprise, surprise. All right, so there's a bunch of cool stuff in here. It's not like groundbreaking changes. Tax cuts and Jobs Act 2018, that was groundbreaking, changes the way we do a lot of things, changed a lot of strategies. This is some nice adjustments for those approaching retirement. Some things to look forward to for those who are saving for the long term. One thing that I love in this is the retirement "lost and found." This is sponsored by one of my favorite senators, Elizabeth Warren, who just knows so much about personal finance. She was a professor at Harvard. She's written great books about-

John:

Nevertheless, she persisted. Elizabeth Warren.

AJ:

We thank Elizabeth Warren for the 50/30/20 budget. Anyway, this was her little baby, retirement lost and found. Hey, I worked at a job 10 years ago. I put $5,000 in it, my 401K provider has changed 16 times and I've moved, how do I even find that money? There's going to be a national database of retirement accounts. So you can log in, I assume you have to give your social security number, your name, and they will find that account for you. And then you can access it and roll it over into one account that you can see where your money is. So, love this. That's just a, why didn't we have this sooner?

John:

Love this for Liz. Absolutely.

AJ:

Thank you, Liz.

John:

The other piece that I thinks neat and I think our listeners might find more intriguing is the employer match on student loan payments.

AJ:

Student loans, tell me more.

John:

So a handful of employers went to the IRS a few years ago and got something called a private letter ruling, which is basically the IRS's blessing to do some type of strategy and say it's legit with the tax code, but private letter rulings only apply to you as the taxpayer. They're not precedent setting for other taxpayers necessarily. And so they rolled this into Secure 2.0 said basically, if you as an employer offer a match and your employee isn't participating, you can count payments they're making on their student loans towards as a 401K contribution sort to give them the match. And so if an employee doesn't have the cashflow to both make their student loan payments and contribute to 401k, they can still get the match. It's a great incentive for folks to pay down their student loans and also still get a retirement account benefit. And so yeah, do love this. This is a great addition here.

AJ:

And hopefully this will lead to a better understanding of the time value of money and compound interest, which is like, hey folks, yeah, you just graduated college. Probably don't have a ton of free cash flow from that entry level job to pay down your student loans and contribute 4% to your 401K, but you get credit for making that. I mean, you are saving money, you're paying down debt. So you're doing something and it's just a great... Even if it's that 4% match, let's throw that in a 401K. Let it ride for 30 years. Compound interest goes crazy. There's your retirement income that you can now start taking at age 75.

John:

Yeah.

AJ:

Ashes to ashes, dust to dust, as they say in your religion, I think.

John:

It's remember that you are dust and to dust you shall return. Anyway, Lent his just around the corner folks.

AJ:

Anyway.

John:

But, yeah, they also rolled out Roth SEP IRAs, Roth simple IRAs.

AJ:

Wait, there's a Roth SEP... Oh, yeah.

John:

Correct.

AJ:

Interesting.

John:

Which is intriguing because SEP IRAs are kind of like the icing on the cake when it comes to retirement account contribution sometimes. There are some folks out there, so for an example, you've got a W2 job and then you also have a big side hustle, you can have a 401K for your W2 job and then a SEP IRA for your side hustle, and potentially now save all that in the accounts that's going to grow tax free. So yeah, there's going to be a lot more Roth money out there, which is great for the budgetary math over the next 10 years and bad for it later on. So my thought is, so let's make a prediction here though, how do they come after the Roth money later and get the money out of there? I think eventually RMDs for Roth IRAs. I think less favorable distribution provisions at death.

AJ:

If not RMDs, yeah, at death, a big change that they lose their Roth status at death is going to be my-

John:

It just [inaudible 00:21:17] out.

AJ:

My prediction is that it converts to a traditional death certificate.

John:

It just converts to brokerage. It just gets out of the Roth IRA, probably if it's after-

AJ:

Oh, wow.

John:

Yeah, that would be my thought.

AJ:

Interesting.

John:

You have one year after death or something like that, because 10, 20 years from now, there's going to be like, we've got all this money that's growing tax free. And then Congress will be like, well, we actually want money again so we're going to find a way to tinker with it.

AJ:

For sure. All right, let's dive into something close to my heart, the Salton Sea. Have you ever heard of the Salton Sea?

John:

I have not, but it's near San Diego. Maybe that's why I had San Diego on the mind.

AJ:

It is near... Maybe that's why you had San Diego on the mind. So the Salton Sea is, if you've never heard of it, look it up. It's pretty wild. It's a very bizarre place. It's the largest lake in California. And it was accidentally created by human error because in 1905, they were either building a dam or something and the Colorado River broke free, burst through this dam and millions and millions of gallons of water are rushing into this valley for 16 months. It took them 16 months to dam up the river and created this-

John:

Damn.

AJ:

Massive lake. Yes, exactly, damn. So in the forties and fifties, the Salton Sea was like this playground for the Rat Pack and Marilyn Monroe, and it was very glamorous. And then the water started evaporating, all the fish died, and it became this stinky dead lake. And now it's just this abandoned end of the world place. Anyway, I went this weekend, it was awesome. But of course-

John:

Is that where you were? Is that where you were?

AJ:

That's where I was, yeah. That was the weird creepy landscape.

John:

Yeah, apocalyptic place.

AJ:

But Salton Sea's been in the news a lot. Great dive bar, by the way. Shout out to the Ski Inn in Bombay Beach on the Salton Sea, had a lot of fun there. Anyway, they found lithium deposits in the salinity in the water. And as you may know, lithium is very valuable for batteries. And what might we want batteries for these days that people seem to be buying a lot of?

John:

Electric vehicles, perhaps?

AJ:

That was a give me John, and you went with the correct answer. But yes, for electric vehicles.

John:

Electric vehicles for 5,000, Alex.

AJ:

For electric vehicles. So there's been a lot of speculation about which company is going to get the mining rights to go into the Salton Sea and get out this lithium. So it's a big... I was thinking of the Gold Rush in 1849 in California with all the miners.

John:

Yeah, that's what it is.

AJ:

I'm like, this is the lithium rush. It's the next wave of that.

John:

It's like drilling for oil. I mean, I think Newsom was like, we want to be the Saudi Arabia of lithium. And I was like, I don't know if that quote's going to age very well at all, but okay. Speaking of things that don't age well, tax-loss harvesting platform Unsellable is building the world's largest collection of worthless NFTs. Think about it as the dump for the NFT that you bought a year ago that's now not worth anything that you need to sell to take a lot on your tax return. Because even though it is "worthless" to you, it's not a worthless asset or worthless security in the eyes of the internal revenue code. Therefore, you can't take a loss on it just because it's depreciated in value and so they're coming in here and bottom feeding basically off of this. And it's interesting business model.

AJ:

I'm into it. I mean, yeah, if you made an investment in something, it didn't even occur to me, honestly. I didn't even think about the fact that there wouldn't be liquidity for an NFT because it's such a new thing. It's such a new space.

John:

But there's so many of them. Anybody and their brother could create an NFT.

AJ:

So the idea is you lost money, that sucks. You made an investment that can be valuable to you because you could take that loss on your tax return. Previously, there was no way to do that. There was no market for it and now this Unsellable is providing a market for that.

John:

Yeah, this is one crypto company I might be able to get behind here. I'd love this concept. Yeah, they're kind of cleaning up the... It reminds me that Portlandia episode where they're doing the recycling. If you've never seen that episode-

AJ:

I don't remember all.

John:

Where it's like all different colors and then everything just gets dumped in the ocean anyway at the end of it. So it's very good. Highly recommend.

AJ:

Well, good news. We're going to clean up the ocean next week.

John:

We're going to Santa Monica and cleaning up the beach, folks.

AJ:

Love it. You were yelling at me because this article is old, but I still wanted to talk about it. There's a company called Loyal, which this article is quite old, it's from 2021. At that point, they had raised 27 million. To date, they've raised closer to 60 million. They aim to give dog owners more time with their pets. This is a pet, a canine longevity biotech startup. And so their whole thesis is that by doing research and trying to improve the lifespan of dogs, which are sort of have similar biological systems to humans, they can potentially have great research to prevent heart disease, cancer, all the things that humans are still dying from that human research can't move fast enough to try to cure. I'm super into this.

John:

Well, the other thing is is that human's life expectancy is five times that of a dog's life expectancy. And so therefore you have more generation of dogs to look at, I guess I'm assuming is the... I'm not a science guy, but-

AJ:

What were the-

John:

That's interesting.

AJ:

Remember when you were learning about genes in biology as flies-

John:

I do not.

AJ:

You don't remember that?

John:

I do not remember. I do not remember any of that.

AJ:

That was so cool. There's a specific type of fly that their life and death cycle is a few days, so they use them to study genes a lot because you can-

John:

Like evolution and stuff like that.

AJ:

Yeah, you can have six generations in a semester and you can understand how dominant and recessive genes work.

John:

Wow.

AJ:

Fun stuff here on the [inaudible 00:26:58].

John:

Yes. I graduated college 4.0 and the only reason why is because I took Biology 101 pass/fail because I knew I would never get an A.

AJ:

That was smart. I found my old report card from high school the other day.

John:

How bad was it?

AJ:

It was not great. It was not as good as I remember.

John:

What do you think my report card from high school looked like?

AJ:

I don't want to talk about your report card from high school. I'm sure it was perfect, John, just you're perfect.

John:

Salutatorian.

AJ:

You're perfect in every way.

John:

First loser. Jason, if you're listening, I can't believe you beat me. Anyway, I'm not bitter. Let's keep going.

AJ:

All right, one more. Because we love to talk about accountants. There's this huge Wall Street Journal feature, Why So Many Accountants Are Quitting the Industry. Yeah, there's quote from the article. "A number of US students who completed a bachelor's degree in accounting declined nearly 9% to about 52,000 in 2020 down from almost 57,000 in 2012. This is really important, because accountants are needed to audit public companies." We think of accountants, a lot of our listeners, I'm sure they give accountants as people who help them file their personal taxes. But the accounting industry is massive because we need lots of accountants, we need teams of accountants, we need hundreds of accountants for these massive public and private companies. What's a great example recently in the news of a company that really could have used a team of smart accountants? Well, that would be the FTX. Maybe if we had had a few recent graduate accountants actually doing some bookkeeping, not in QuickBooks, in some kind of software suitable for a multi-billion dollar hedge fund, we would've avoided the catastrophe and so many people wouldn't have lost so much money.

John:

Perhaps. I mean, if you look back at the Enron scandal and WorldCom, what it brought down Arthur Anderson, which was a large accounting firm, it led to a bunch of new accounting laws. Sarbanes Oxley, for example, being one that we hear about all the time. SOX compliance. I mean, this is a big deal, but also we got to do something to improve quality of life for accountants. I remember when I started out in finance, the external accountants used to sit next to me. I'd show up to work seven o'clock in the morning, they'd be there, I'd leave at five o'clock at night, they'd still be there. That's not necessarily an attractive quality of life expect, especially for Gen Z, Millennials. And so some things going to have to shift here.

AJ:

No, and the salaries for an accountant are not where they are for, let's say an investment banker, which is a sexier career at the moment, or a software engineer.

John:

Yeah, long hours, but definitely sexier.

AJ:

Yeah. Counterpoint, what if the industry contracts so much that accountants become in higher demand, even higher than like a software engineer and then we end up with too many software engineers, those salaries decrease and we end up with a bunch of software engineers going to go taking night classes to get their CPAs. That's my prediction.

John:

I'll believe it when I see it, but it's just a matter of time. Well, folks, that's going to do it for us here today.

AJ:

Speaking of time, we are out of it, folks.

John:

We are out of it. You could email us at liquidityevent@brooklynfi.com. Leave us a voicemail at memo.fm/liquidityevent, and we'll play it on the air. Show notes at brooklyni.com/episode75. Brooklyn Fi stans could leave us a review if you want to be weird about it. I'm John Owens.

AJ:

I'm AJ Ayers, and happy New Year to you. We will see you soon.

John:

Cheers to 2023.

AJ:

Bye.

Speaker:

Thanks for listening to the Liquidity Event, hosted by AJ and Shane of Brooklyn Fi. Head on over to brooklynfi.com where you can subscribe to the podcast or YouTube channel, or if you want to learn about their full service financial planning, tax, and investment firm specializing in tech professionals and creatives on the path to financial independence. We'll see you next time on the Liquidity Event.