Over the years one of the most asked questions aimed my way is, “Long term relationships with your clients — how does that work?” I talk about that here.
Transcript: Hi this is Jeff Brown the “BawldGuy”. So many times, callers that are new to me want to know, “Long term, what is our relationship?” And over the first part of what we do is easy. We figure out where you are as an investor. Maybe you’ve never invested before in your life, but you have the assets to make it happen. That first round basically becomes mechanical. You buy this. You buy that. You kind of get things set up. But what really happens, and where I try to bring as much value to the table in the long run is, how do we adjust that plan when things outside of our control come to the surface. Interest rates are low now. What happens if interest rates go to 9% or 10%? What happens if for some reason unemployment rises. There’s all kinds of things that can happen. How do you do it? Well, flexibility is always the number one thing that is required in any purposeful plan, and the reason is, you adjust. It’s very simple. You never say, “I’m going to buy this asset. I want to buy that asset. And in five years we’re going to sell. We’re going to exchange. We’re going to change this.” Looka, I put my crystal ball into the repair shop in the late 70s and it’s still not come back. I’m tired of wiping egg off my face, and I stopped predicting beyond tomorrow. Now, I still talk to clients, and I’ll say, “Well, in six months or 12 months.” But I still buffer that with the idea that that’s a given that these factors remain intact, because we just don’t know. So what I tell people is, there have been times when I’ve had clients, I just say, “Go take a vacation. We’ll talk next year.” During the S&L crisis, I personally, for all intents and purposes, took two years off, and I told my clients to do the same thing. There was nothing they could have done prudently, unless they had eight figures of money, because all the various government entities who were getting rid of all the problem properties were only selling to the big funds and the big players. A lot of times, even guys that had $20 million couldn’t compete with the billionaires and the big funds with $100 million. So we don’t know what’s going to happen. Sometimes, I say, “Look, we’re not going to assume any appreciation.” But what if it happened? I might come to people that bought a year ago, and in three years the atmosphere is okay, and I’d say, “You need to do a tax-deferred exchange, and here’s why.” Or I might say, “We’ve done some other strategic planning for three or four or five years ago. You’ve executed your part of it. We’re going to get you half a million dollars of after-tax cash in your Levis. But when I previously told you that probably buying more real estate would make sense, well that’s not true anymore. Now you need to buy this, or you need to increase your cash reserves to this amount.” We just don’t know. Here’s the thing, and here’s the takeaway to planning. Whenever you can increase the options on your menu significantly, you do it. Because even though it’s true that the man with the gold wins, the investor with the most options wins, and that’s the whole idea of purposeful planning. You’re trying to get from point A to point B, which is retirement. You want the safest income tax sources you can get. You want the most after-tax retirement income you can get. But you also want the flexibility, and you want the ability to move when you can, and you can only do that if you have more options than the other guy. A lot of people ask me after talking with me one or two times, usually for over an hour each time, we get very in depth in our conversations. They want to know, “Jeff, you’ve never asked me to pay you a fee for your time. You freely give of it. How do you get paid? I know you don’t donate your time.” And it’s very simple. I’m not special. I’m a broker. If you buy a piece of real estate from me or a note, I get paid by the note seller or the seller of the real estate. It’s just that simple. Now, I have a retainer. That’s $3,000. And that $3,000 is taken only to make sure I get serious investors. As soon as they do something where I do get paid, they get that $3,000 back in the next two to seven days in their mailbox. I don’t want their money. I don’t need their money. What I’m avoiding with that retainer is to avoid wasting my time. My own CPA tells me at least twice a year that he figures I save 400 to 500 man hours a year of my own time by having a retainer, and ensuring that I’m only dealing with serious people. But again, they get it back 100% within two to seven days after they do something where I get paid.