How Rich People Make Their Money Work Harder!

In this powerful episode, Derek Dombeck sits down with Alan Franks — Certified Financial Planner and author of Empowered Money — to dig deep into the financial blind spots most business owners and investors overlook. From early financial education to leveraging debt like the wealthy, Alan breaks down how to build true enterprise value, plan for multi-generational wealth, and use creative strategies for long-term financial freedom. Whether you’re a real estate investor, entrepreneur, or someone serious about financial legacy, this conversation is loaded with value.

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And here he is Mr. Alan Franks. Alan thank you so much for giving us a part of your day. How are you doing man? Doing great Derek. Thanks for having me on today. Well you know we’re going to talk about something that most people don’t want to talk about or I shouldn’t say don’t want to don’t think about talking about in their business until they’ve been in business for a long time which is a huge mistake. So before we dive into all of your knowledge, tell me a little bit about yourself. Yeah, yeah. So I’m a certified financial planner here in the Atlanta area. I’m married to my wife Allison. We’ve got a 15-month daughter. We’ve got a son coming in here in July. And that’s where we are now. But the journey to get here was obviously unique and hard in many ways. My wealth building journey really starts back to when I was a kid and my dad, I was given this unbelievable gift of a financial education that not many people receive. And so my dad would always bring me in and meet with his life insurance person, his investment person. As a matter of fact, I remember I think it was probably 2006 when I walked in, my dad brought me to a real estate closing where he was closing on six rental homes in Athens, Georgia with no cash down, right? And just to show you kind of the times that were at that time. And so, you know, I remember there’s just stacks of paper. Man, I think we killed a forest that day with that. But that was because he had signed up for a Robert Kiyosaki course. And one of the most vivid memories of my childhood was actually on Saturday morning sitting around with my two brothers and my father and just doing it out, playing cash flow board game and just really having a fun time learning about how to get passive income to be more than our expenses. And so when I graduate, I study economics at Mercer University. And when I graduated in 2010, there just weren’t any jobs. I had an internship lined up with Lloyd’s of London in London. I thought I might be getting a nice consulting gig or something like that. I worked hard enough during an undergrad to get there, but there just was really nothing in 2010. We were in the depths of the economic recession. So the one thing that there was was a need for financial planning because financial planning tends to go up. Demand goes up when turmoil goes up. And so there was a demand for financial planning. It really fit my personality. So without further ado, I graduated on Saturday at 10 a.m. And by 12 o’clock p.m., I was in the office accepting a position as a commission only financial advisor, which I wouldn’t wish upon my worst enemy, but it did get me to where I am here. So, you know, between 15 years ago and today, there was the first five years, there was a lot of being stood up for lunch, a lot of being hung up on with cold calls, a lot of – I joke, I said I ate a shit sandwich for breakfast, lunch, and dinner for many years to get to where I am right now. But now I’m at the point where we’re doing true, well, comprehensive wealth building, and I couldn’t be having more fun. I’ve got a great group of clients. And, you know, one thing was certain to me is that this mission, this mission of helping people live their fullest lives through sound financial planning with this idea that financial planning is that one thing. If we can get this one thing right, it really makes everything else in your life that much better. The shelter that you provide your family, the food that you eat, the vacations that you take, the charity that you’re able to give, the education that you’re able to give your kids, right? And just overall, less stress that helps you sleep better at night, more excitement that helps you get out of bed in the morning. So this mission of helping people live their fullest lives through financial planning is what led me to write my book, my book Empowered Money. It really is an A through Z guide on how to develop a good financial plan. And so, yes, of course, we do have one-on-one clients that we work with, but realistically, the Empowered Money book is really a way to develop a financial plan without having to spend tons of money to do so.

Well, I couldn’t have, I guess, brought this up in any better way than you talking about your financial education and your youth. Because my kids, specifically my oldest, who’s 18, going to be graduating soon, and then my son is 14 and my youngest is seven. We’ve been playing cash flow and other types of games like that with them for years. And it was funny because I had some real estate investor friends of mine from Georgia that were staying with me in Wisconsin. And so this was, I think McKenna was 11 or 12 years old. And we ended up in a cash flow game. And she beat all of us when she was, you know, 10 or 11, maybe 12. And I mean, it was very dramatic. She had a crown made for herself and everything else, right? She beat all these super intelligent real estate investors who are also in the education space. So it was really cool. And that picture showed up in many of slideshows for several years after that. But that’s what led you to take that journey was the original financial education, which I love. I love that. So now what do you think is the key components to having financial planning done and in business and in personal, it all comes together. Where are people falling short? Where are business owners falling short in your opinion

Yeah. Okay. So let’s take a step back and look at business owners specifically here. And we’re going to sidestep real estate for a second here because this is actually a lot easier in real estate. But when we’re working with business owners, who is the majority of our clients at this point, because they just have a different tax playbook so we can in general add more value to them. What I’m seeing is the biggest financial mistake of a business owner is that they are looking at their business as almost a lifestyle business. They run their business. It gives them income. They get to go live their lifestyle. And very rarely do they look at this in the terms of what we would call enterprise value, right? What is our business actually worth, okay? So one of the things that we do first thing when we take on a business owner is we run a non-qualified valuation on them because they don’t really know what their business is worth. If you want to know what your real estate is worth, then go to Zillow.com and get a pretty fair estimate. If you want to know what your stock portfolio or your 401k is worth, shoot, you go on. It’s going to tell you the exact to the cent of what it is. If you want to know what your business is worth, good luck. I mean, you’re going to pay $20,000 to get a qualified valuation, right? Or, you know, we’re going to use the same software to do a non-qualified valuation. And what we’re going to do there is we’re going to tell you what we think your business is worth. And it’s going to be off a couple of years of tax returns and a self-assessment that the business owner fills out. But then what we’re going to do is show you the two or three areas that you can focus on to increase the multiple of your business to help grow the enterprise value of that business. And then what we’re going to do is every single April or September, October, whenever you do file your taxes, we’re going to update that business valuation because what we found is that businesses have not kept up with the S&P 500. And I think one of the reasons that that happens is because we’re not tracking our growth. We’re not tracking our progress here, right? And there’s so much power in tracking because in general, great book, by the way, It’s the gap versus the gain. In general, we’re always focusing in on the gap, where we are now versus where we want to be. And realistically, we need to take a step back and get perspective of how far we’ve come, how much we’ve grown that business. Because when we look back at where we’ve come from, we get confidence. We get momentum, right? We get mental clarity. We always live in, hey, I want to be here and here and here, and we never find happiness. Well, we need to take a step back, look at, give us a perspective of how far we’ve come, right? So having a valuation done every single year in your business is going to help you track your growth, track your progress, and make sure that we don’t lose sight that this is a valuable asset that one day we could sell, whether it’s selling to our kids, selling to our employees through an ESOP plan, selling to an outside buyer, which is going to probably net you the most money there. Wherever it is we sell, having an idea of building this enterprise value of our business is so critically important, and yet very few business owners do it.

Yeah, I agree 100%. And the other thing that most business owners don’t do is design their business so it is sellable. That’s right. You know, they’re so entrenched in the day-to-day, the valuation goes in the toilet if they’re not there. But let’s – yeah, Derek, let’s use that bus analogy real quick, right? Every single time I go and I meet with a business owner, I always ask them, hey, where are you sitting on the bus? And what do you mean the bus? I’m like, you’ve heard of the bus analogy, right? You’ve got to get the right people on the bus. You’ve got to get them in the right seats. When you think about your people right now and the seats they’re in, what seat are you in? And if they don’t say the driver’s seat, I’ll call them a liar, right? Because the business owner sees himself in the driver’s seat. All right, well, let me tell you what an outside buyer doesn’t want to buy. A 60-hour-a-week job full of problems, right? without any infrastructure around it to solve those problems. So what we do when we’re working with the buyer to get that multiple, sorry, the seller to get multiple off, say, hey, how do we move you from the driver’s seat to the front row so you’re telling the driver to go, to the second row so you’re monitoring who’s telling the driver where to go, to eventually off the damn bus completely, right? And that’s the goal, and it’s a goal because realistically, it’s very hard for a business owner. It’s very hard for a business to run itself without the business owner, right? Maybe a few businesses, but I’ve never really seen one reach that. But it’s still a really good goal. The closer we can get to it, the easier time you’re going to have of exiting that business.

Well, and I know we’re going to get to that in this conversation. But the other thing is what happens when that bus driver steps out and then gets hit by his own bus and is now gone. But before I get you off track, talk about multiples because very few people understand how that works. When you sell a business, it’s based on a multiple, and it’s no different than if you’re selling a house. It’s worth what somebody’s willing to pay you, but when you’re doing the non-qualified valuation, how are you choosing the multiple that the business is going to be valued at? You know what’s crazy about the multiples is that it is very dependent on what industry you are in, right? So I would say there’s two factors that really determine what that multiple is going to be. Number one is the industry that you’re in. Number two is the size of the business. So let’s talk about the industry first, right? Financial planning industry, my business, I mean, we are looking probably on average of a four to five multiple right now because our business is so sticky. But an accountant, an accountant is looking at a one to two multiple because it’s so much easier for you to just go switch accountants, right? So much easier for you to switch accountants than it is for you to move all of your assets over to a new firm, okay? Moving all your assets over to a new firm is quite a task, right? So therefore, because it’s stickier, right, our businesses are worth more than an accountant’s business, right? Now, the second, so depending on what industry you’re in, there is a rule of thumb of what that multiple is in that industry. So we take the average multiple, and depending on if your business is a little bit better than the average, you might, if your systems are better, we might get a little bit higher. If they’re worse, we might get a little bit lower, right? Now, I do want to say that when we’re doing a business valuation, we don’t keep this into account what I’m about to tell you, But once your business gets to a certain size, let’s call it $10 million of revenue, now all of a sudden we might start attracting private equity money. And private equity money, in one way, it’s not real money. On the other way, it’s very real money. Right? I would say they just play by a different set of rules than we do. Right? And so when we’re a great example would be the financial planning industry again. Let’s say that we get a lot of money under management. Let’s say north of $250 million in assets under management up to a billion. All of a sudden, we start sneaking up into six, seven, eight multiples, right? Same exact thing for an accounting firm. and the larger the accounting firm goes, we go from selling to a mom-and-pop buyer, okay, that’s going to pay your, you know, 3x multiple, give or take some, right, to going and selling to a private equity that’s going to give you double maybe that multiple right there. And so those are the two things when we come to multiples there. So number one, it does determine, it’s determined a lot by the industry you’re in. And then number two, it is determined by the size, right? So a lot of what we’re doing with our sellers, with our clients, is saying, hey, I know you want to sell, right? You want to get out. I get it. Being a business owner is a headache, right? But what if we were to go acquire a few places here to get your revenue north of, let’s say, 10 million bucks so that we can start attracting some of the big dogs to the play field here, and let’s see if we can get that multiple up. So we’re looking at those two here. So if a client has a 10-year runway, We’re definitely helping them get with the right business broker, get with the right lender. Let’s go leverage some money. Let’s go acquire here and get that multiple up, up, up. But on the other hand, if they’re more like a two-year runway, then, you know, we’re just like, hey, how can we clear up all your business systems to help you get the highest multiple possible?

Right. Well, and it’s no different than in the commercial real estate world. It’s all about cap rates, and the cap rates can be affected by so many variables. too. So again, not many people talk about the multiples and that’s a great explanation. So, all right. So we’re talking about businesses. Now you come from a real estate background. I know that you like real estate. Let’s kind of shift gears. You know, as a real estate investor myself, what do I need to do for my planning, my financial planning in the real estate space and overall business? Yeah, great question, Derek. So I love the way that real estate fits into an overall financial plan. And I love it because of one word. That one word is leverage, right? So let’s say that you put $100,000 down on a half a million dollar property, right? And you look at it and, okay, that half a million dollar property earns 10%, right? And next year it’s worth $550,000, right? Well, you’re right. Yes, that property earned 10% and now it’s worth 550. But remember, you only put in $100,000. So even though the property’s up 10%, you’re up 50% on your money, right? And that’s something that’s very hard to get in other areas, but it’s really good to get in real estate. So I do like that idea of leveraging something that we call OPM, other people’s money. We’re leveraging other people’s money. Other people go and they put that money in a bank.

That bank puts it in a savings account, gives them a really bad yield on that savings account, and then goes in it and it lends it out to you in the form of a mortgage so that you can go get properties, whether that’s residential, whether it’s short-term rentals, whether that’s climate-controlled storage, you name it, right? There’s a lot of different ways that we could leverage other people’s money. But I think where people really miss the boat here is how can they leverage their own money to go do this, right? And so when I’m working with clients, I introduce them to this concept. And this concept is that wealthy people understand how to utilize debt and most people do not, okay? Right? And the way that wealthy people invest is different than the way that most people invest. Wealthy people invest their money. Generally, they start off investing it in the stock market. Okay, they may have gotten wealthy through their business or real estate, but in general, when they liquidate, they put it in the stock market because they realize that the stock market is a stable vehicle. In general, it’s going to double every 10 years. If it earns 7%, rule of 72 says it’s going to double every 10 years. But then what they do is they go borrow against their stock market using something called a securities-backed line of credit. Think of a home equity line of credit. They have a life insurance line of credit. Think of a securities-backed line of credit. I am a big fan of lines of credit, right? So the way that we are trying to build a financial plan is, how do we get more dollars working for you? Well, most people make a dollar and they invest a dollar. Wealthy people make a dollar, invest a dollar, borrow 50 cents against that dollar to go do other things. So they’re getting $1.50 working for you. So they’re going to accumulate wealth typically at a 50% higher clip, right? Instead of $1, we got $1.50, right? So when I’m working with my clients, I want them to be aware of where their liquidity is. Typically, there’s been a lot of appreciation in primary homes. So I want all of my clients to get a home equity line of credit. If nothing else, I want to use it as an extension of their emergency fund, a cash equivalent. When we have, let’s call it $250,000 available to us via home equity line of credit, maybe we can keep a little bit less money in cash. Maybe we can invest that money. Maybe our investments can be a little bit more aggressive because we know we won’t have to sell our stocks when it’s down. We can just borrow from the home equity line of credit. This is the epitome of having a strong defense can help us be more aggressive on offense. Same exact thing with the securities-backed line of credit. So it works very similarly. Whatever you’re invested, typically you can borrow 50 to 65 cents against that. Once again, it’s a good emergency fund. If we ever need money and the market’s down, it gives us another way of pulling money out without having to sell stocks at a loss. The third line of credit I mentioned earlier, I do have life insurance. I think it’s a really cool vehicle. I think it’s an asset diversifier. The one really neat thing about a loan against the life insurance policy is that you don’t necessarily have to pay it back. It will just be paid back at death, right? Kind of like a HELOC. You don’t necessarily have to pay back a HELOC. It’s just when you sell the home, the first check is going to go to the credit union that the HELOC is at. The second check will come to you. Same exact thing with the life insurance. Just selling your home to death, right? Change that to death. First check will go to write off the loan. Second check will go to your family. But the one thing that’s cool about life insurance policy is that they do capitalize the interest, so you don’t have to pay the interest on it. So that really helps there, right? Just rolls into the loan. That being said, I’m a fan of having lines of credit. Number one, for security. And the second is opportunity. Your home equity, your equity in your home is earning what we call a blue tar scheme, which is a character from Animal House who had a GPA of 0.00, right? Your equity in your home is earning you nothing, right? So why would we not borrow against it at 7.5% interest rates to go do hard money lending at 17.5% interest rates to make an extra $10,000 net for every $100,000 we do it, right? What if we don’t need the extra income? Why wouldn’t we borrow from that home equity line of credit to go do a real estate syndicate to be able to go get more real estate here?

Maybe do something that’s got a 6% dividend that helps pay the interest, but maybe 10% growth on the NAB right there. So that’s a little bit more tax advantage right there, right? Because the one thing I’m certain that I’m talking, there’s probably a lot of wealthy and high-income earners on here. So we do have to worry about, hey, how does this stuff get taxed? I love hard money lending. Right now with high interest rates, it’s very lucrative. That being said, it is all taxable income, right? If we can find a way to get on the – it’s funny. When you’re talking about private placements here with real estate, it is actually kind of hard to get diversification within this stuff, right? If you give me $50,000 to go put, I can go get you 500 different stocks pretty darn quickly. As a matter of fact, I can get you about 50,000 different stocks really quickly, right? That being said, stocks, bonds, all different countries, all different industries. With private placement, 50 grand is typically the minimum, right? So we’re thinking about diversification here. We may want to do different funds, right? Even if it’s with the same person doing different projects. But also think about diversification as being on both sides of the balance sheet. One is a lender with a hard money lending. The other is an equity owner, right? Now, the equity owner is probably going to have more upside over the long term. It’s going to have a little bit more maybe tax advantage growth there. But on the lending side, shoot, doing this, doing the lending can actually, getting that interest rate can really help me pay off my lines of credit a little bit quicker, right? So I ran into this just by dumb luck, but I’ve got some of my lines of credit invested into an apartment building. I saw it in the hard money lending space, and that hard money lending kind of really helps me pay for these apartment buildings that aren’t really giving me a dividend yet because they’re still getting built. So having diversification in different projects and different sides of balance sheet is super important. But what’s more important is that you understand that, hey, we can leverage some of your money in order to leverage a lot of other people’s money. And people like Derek’s expertise and knowledge and time and hard work by joining these syndicate funds that he’s doing and really getting some passive income flow. Because I’ll tell you, I’ve got six rental homes and there’s nothing passive about that.

What do you mean? Tenants and toilets are very passive. Unbelievable. Yeah. And then he had a couple of kids in there and I’m like, oh, gosh, this has become a nightmare. And that’s why I really enjoy a lot of the deal structures that I do. I mean, certainly I buy and sell real estate the boring way with cash. But I like the creative structures, specifically holding options on property. Because if I go and option a property, and I do this with my private investors, we option a property and maybe we have a 10-year option. In fact, I’ll tell you a quick story on one. A guy was losing his house and he needed $4,500 to stop the tax foreclosure. And I literally had to show up in the courtroom with cash. They would not take any other proceeds. So I gave him $4,500 to have a 10-year option on his property. And my overall option purchase price is $18,000. At the time, and this is just a two-acre lot with a shitty little shack on it. At the time, it was probably worth $75,000. So my option price is $18,000, of which I’ve already given him $4,500. And I have 10 years. Well, that was five years ago. And this one, I’m holding in my retirement account. I have no intentions of exercising that option until the end of the 10 years right at the end, or if he’s still alive because there’s a really good chance he won’t be. We’ll talk about an extension. But think about what that does. I’ve got $4,500 from my retirement account. I have no liability. I have no maintenance, no upkeep, nothing taxable, but I’m gaining all the upside on that property until I exercise. And if I feel like it, I could sell my option to you today for whatever we’re willing to sell it at, right? What multiple am I willing to take? What multiple are you willing to pay? So I

love those types of strategies. You’re kidding, right? And those are types of strategies that also get investors excited because they’re different, right? And so I’m not going to lie to you. in our investment world and the investment world itself is getting a little bit vanilla. A lot of portfolios are very similar. So what we’re doing saying, hey, how can we add extra value to our clients? Let me introduce you to Derek here that’s got a really unique strategy that not many people know how to do, even know exists, right? And that’s when you start sounding like a genius, right? When you introduce people to ideas that they did not know even exist. And so that’s why I love meeting people like you. Yeah, absolutely. Absolutely. The part about any business, regardless if it’s real estate or not, and I think this was definitely my biggest mistake the first seven, eight years of my career, was not establishing that network. And it’s so much easier now with podcasting and the internet. But when I started in 2003, hell, I bought my first properties on the newspaper. you know classified ads so it’s it’s a lot easier now but you build that network you look for those opportunities and and you don’t have to just invest in your backyard it can be anywhere you just remind me there’s a video i saw yeah a quick video on instagram it was a billionaire talking i had never heard of him i didn’t who knows if he was actually a billionaire but he’s talking about the difference between billionaires and millionaires he said what he’s noticed is that millionaires have really good habits. They wake up, they hit the Peloton, they do the sauna, they’re in the cold plunge, they’re reading every night, they’re doing their journal, right? They’ve got all these really good habits. And from his perspective, the billionaires didn’t really care too much about that. He said, but what billionaires have is connections. If we want something done, we’re one phone call away from getting it done. And that really stuck to me because I’m not going to lie. I do like the cold plunge every now and then, and I do journal every night and I read every night and I’m like, oh, that describes me and he’s different than I am. Right. And so video really stuck to me. And right around that time, I was reading this book called Who Not How. And the main premise of this is, hey, you don’t really know how to do this. You just know who can do it for you. Right. And so it’s funny when people when people reach out to me or meet an accountant or attorney or meet a new client, they’re always asking me, hey, what’s your what’s your expertise? What’s your specialty? Right. I said, you know what? My expertise is I’m a generalist. I know a lot about a lot, but I know what I don’t know. And I know who I can get you in contact with to make things happen. Right. And that’s what I think my clients really do like about me and say, listen, I don’t know how to do this stuff, but I know that Derek does. And I’m not even going to try to, you know, learn how to do options on real estate. I’m just going to get people to Derek right here. And so, yes, that network is so important. Growing that network is so important. And over time, you really, you build your posse there and you build your group of people you’re comfortable with, you trust, right? And you’re constantly bouncing ideas off of each other and driving people to succeed.

Absolutely. I got to tell you though, you know, cold plunges now are all the rage, but we’ve been doing that in Wisconsin for years. They call it a polar plunge you cut a hole in the ice you get really drunk and you jump in and it’s always for charity i mean we raised money for special olympics and people in need all the time and now it’s just now it’s a fad but we’ve been doing that forever up here you mean you spent five thousand dollars you’re gonna get a cold plunge nope chainsaw cut a hole in the ice you can do it about four months a year so not a problem um well you know this is the generations of wealth show so so What about generational wealth, right? We’ve all heard, you know, the entrepreneur starts a business, grows a business, second generation comes in and maybe helps grow it and they start getting comfortable. And third generation F’s it all up and squanders it. How do we build multi-generational wealth and not allow future generations to piss it all away? Yeah, I’m going to recommend another book here. And this is your main topic. Because, by the way, building a very successful business and building wealth and also raising kids that know how to take care of that wealth are two totally separate challenges here, right? We know a lot of successful business people that build really good wealth, but they did so by sacrificing some family time on here, right? And so I want to recommend a book called Entrusted. So E-N-T-R-U-S-T-E-D. And a couple of, you know, everybody’s going to be going and buying these books and not buying my book. But it’s okay, right? We’re going to have a link to your book. In fact, I’m Alan Frank going to do that right now. Everybody go to thegenerationsofwealth.com/empoweredmoney. That will get you over to Alan’s website. You definitely need to buy his book and take in everything that he’s got over there. So thegenerationsofwealth.com/empoweredmoney. All right, Salon. So we got that out there.

Yeah, yeah. And so this book Entrusted, what really stuck out to me are two concepts. Number one is that passing down wealth is a rather new phenomenon, okay? Wealth really hasn’t been created since, let’s say, 1900, right? Maybe the roaring 20s is when wealth really started getting created, you know? And if you were to look at it, it really goes back to England when all of a sudden these manors started to grow and people had farmland, right? And who did they pass it down? And that’s where trust come into play, wills and trust and things of that nature. So in our entire lifespan of humanity, the idea of passing down wealth is a relatively new one. Prior to that, we were passing down knowledge, right? We were passing down skills. We were passing down ideas. We were passing down attitudes, right? And so I think we need to remember that that is the first thing that we need to be passing down is our knowledge, our attitude towards life, right? And so if we can do that appropriately, then passing down the wealth is going to be a lot easier, right? That being said, another analogy from this book, Entrusted, is this. Imagine you’ve got three logs on a fire, okay, and it’s burning hot. But then all of a sudden you pick up a log and you give it, you know, say you have three kids and you give each kid a log, okay? All right, well, a couple things are going to happen. Number one is that that log’s not going to burn as hot, you know, alone as it is together with three. It’s not going to burn as long, you know, separate as it is with three, right? Then all of a sudden you get somebody who marries, you know, that kid and maybe they don’t like him and they divorce him. And now all of a sudden they want half of the law. Right. So all that fire extinguisher.

Yes, exactly. Yes. Yes. Well done. Right. And even if even if that doesn’t happen, just handing a kid a log is probably going to burn them. And what I mean by that is think about the lottery effect. When people win the lottery, they often talk about how their lives are ruined from that day on, right? They didn’t earn that money. They didn’t build that money, right? And so all of a sudden, they have a windfall of money. Everybody’s coming to ask for it. They, you know, didn’t – they didn’t build it, so they don’t know how to retain it, right? And so it really can wreak havoc. Well, think about that for a 30-year-old getting a couple million bucks, right? It’s the same thing. So what we like to do is we do like to leave wealth in trust. Trust helps protect against divorce, against lawsuits. It’s outside of the estate. And then we like to have parameters around those trusts so that maybe your kids can do anything they want, but they can’t do nothing. Okay. And maybe they can do anything that they want, but maybe they can’t do everything that they want. Right. And keeping them honest. And now all of a sudden, now we are building, now our values, our dollars are going to be reflective of our values for a long time to come. And if you think you like your kids, which you may or may not like your kids, depending on the day, right? But guess what? You’re going to love your grandkids, right? Then your grandkids are going to have kids, right? And that’s where we start building generations of wealth right there. And that, to me, is a really cool concept here. It’s something really to strive for. And I want to tell a story real quick. I want to tell a sad story. We have a client, a very wealthy client, and they have one kid. And one day their kid did not answer the phone, and that was a little weird. And they called him later, he didn’t answer the phone. That was even weirder. So they called his department to do a health check. And unfortunately, their 22-year-old son was found dead on the couch. And he died something called dead in bed. It’s when you have type 1 diabetes, you have a diabetes attack, you just don’t wake up. Unless there’s somebody that will give you an insulin shot right away, then it’s tough, right? So, you know, when we have that next meeting and the follow-up meetings, it’s just a different tone because it goes from how do we set up our kids, you know, for future success to now how do we spend all the money while we’re alive? And I want to tell you, it’s really shallow. It’s really, it’s not bringing them any joy, right? It’s a distraction here and you can feel it, right? And they went from building this something that’s going to last and be bigger than themselves to going on all these vacations and doing stuff to their house. It’s just a distraction, right? You can feel it. And by the way, I told them to go do that, right? Because they’re like, what do we do now, right? So the concept I’m trying to relate here is that kind of like building enterprise value in your business can be fun and kind of can be a distraction from the day-to-day roles of your business. Building generational wealth, the value of the vision of it can be a lot of fun to strive for there and can take away some of the pain of the short-term grind when we have that long-term vision built in.

Absolutely, absolutely. And you talk about trust and everything, the way we have our structure is very similar to what you were describing. Our three children are very different in age. So if something happens to us, well, my oldest is 18. She’s going to handle it different than my seven-year-old. And so we put a lot of parameters in place and, you know, they have to be gainfully employed or running a business or putting in X number of charitable hours a year at a legitimate charity. And if they’re in jail, they don’t get nothing. And people are like, well, that’s really harsh. No, it’s not really harsh. Not in my opinion. A hundred percent harsh. Because they didn’t build it, and they’re not going to squander it. So there’s a lot of other parameters in ours as well. Yeah. The reason I bring that up is it took us over a period of probably two years to really go through our entire financial plan personally and then our business. And ultimately, I had a business partner for 10 years, and we had really no end in sight. And thank God we had structured all this. We had buy-sell agreements in place and all the types of things that most business owners take on partners, like a one-night stand. They don’t vet them. They don’t check them for SDEs. They just jump in bed with them. And then, you know, a couple of years later, partnership’s not going so well. They did no planning whatsoever on whether it’s estate planning or exit strategies. So it’s just from my own experiences, I was so freaking happy that we had spent the time and energy to get everything structured.

You got it, right? And anybody who’s been in business for long enough knows how much the wrong partner will cost them in the long run. We had somebody join our team a couple years ago. And, man, it really, really cost us a lot of time and money and headache. And it cost my staff a lot of stress, right? Eventually, we had to fire him. And I want to take a quote from Gary Vee here. Somebody asked him why he’s so good at hiring. He said, I’m not. I don’t believe anybody’s good at hiring. He said, I’m really good at firing. When I see that I hired the wrong person, I get rid of them immediately. The truth is, you don’t know who that person that you’re partnering with is until you’re in the trenches for an extended period of time, and then you really know who they are, right? But when we talk about multi-generational wealth, I’m sure if you listen to podcasts, you’ve heard the story of the Rockefellers and the Carnegies, right? And you look at those two and the model of what to do is the Rockefellers who have all their money in a trust. They use life insurance to help refuel that trust and it’s lasted so long. And then you look at the Carnegies and how they really spit down their wealth, too. And we’re blessed to have a celebrity we can look at and say Anderson Cooper is the first person in the Carnegie family not to receive any money. And look what he’s done, right? Whether you like CNN or Fox, I don’t care. The guy’s been very successful in his career, right? And so you can see how giving people lump sums of money can really hurt them, can burn them long term, right? Whereas that trust, all of a sudden we have some parameters here, right? It’s very giving that you even have a trust, right? Now, I would love to be a trust fund baby. Oh, my gosh. Oh, there’s limitations on what you do with a trust? Okay, sign me up, right? So anyways, those two are really good examples, Carnegie’s and the Rockefeller’s, of what the right trust planning can do.

Well, and anybody listening to the show, if you listen regularly, you know I’m a smartass. But if you’re new to the show, I’m up for adoption if you have a large estate and nobody to give it to. So just reach out and absolutely. So we’re going to kind of start winding down. But I’ve got a question that I’ve thought about really, really hard. And it is, what is the one question I should be asking you that I haven’t? Oh, man, that’s a good one. You know, and I’m going to, I want to go on that and say every, you know, if you’re interviewing a financial advisor, you need to ask them what their financial plan looks like, right? So if I meet Derek, I’m saying, hey, Alan, you know, you’re a financial advisor. What does your financial plan look like? You know, I love that you said that because many, many, many years ago before real estate, I got swept up into a multi-level marketing business. And it was, I was legitimately a financial advisor. And, but it really wasn’t fulfilling because of the way that business was structured. And the one thing that I always thought was interesting is I’m going to go out and help somebody with their business plan or their personal financial plan, but I’m not willing to share my plan or my net worth or what’s working for me. And that’s always been a red flag. So the fact that you brought it up and I didn’t have to ask you that, that speaks volumes. It really does. And the reason I want your listeners to ask the financial advisor that is because, let me let you in a little secret, a lot of financial advisors do not have good financial plans, right? I do. So it’s a strength of mine, right? And I would say this. I want to give some grace here to my financial advisors. There is no salary in our world. We are business owners. So it goes up. It goes down. Stock market’s down this month. That means my paycheck is going to be down this month, right? And so, you know, we’re constantly balancing reinvesting in the business versus putting money away into our own stuff, right? And oftentimes, so I’m not picking on financial advisors. It’s just in my opinion, if I want to be asking people to put money into something, then I really want – I feel like I need to be – have a dog in the hunt too, right? So I would – of course I’m not going to do the same stuff that a retiree, that I’m recommending retiree here. But if I’m not, at least I’m saying, hey, my dad’s in this. My father-in-law’s in this. That’s how much I believe in this. So let me ask you this. Did you want me to answer that question for you? No.

No. I was being facetious. I asked literally every one of my guests that question. And I’ve already given you guys some insights. I’ve got six rental homes. I do have some life insurance. I’ve got some taxable dollars. I will say this, Derek. The one thing that we haven’t talked about yet on this show is tax mitigation strategies. And the more I’m in this field, the more I realize that I really solved three problems. Obviously, the goal is to get people to where they want to go in the most cost-efficient, tax-advantaged, and overall quickest way. And the way we do that is by eliminating their biggest expense, which is not their mortgage. It’s not their food. It’s not their daycare. It’s the taxes that they are paying, right? So in order for us to help people get to where, from where they are, where they want to go the quickest, we’re trying to mitigate the largest expense they have by solving three problems. Income tax problems, capital gains tax problems, and hopefully estate tax problems, right? And if they don’t have those problems, we like to help them create those problems because in general, those are really good problems to have, but they’re only problems if we ignore them. There’s some really good strategies that we could use to help mitigate those problems.

Definitely. And I always giggle when people say to me, well, you flip houses and you do this and that, and then you’ve got to pay taxes. Well, but that means I profited, first of all. So, yes, I’ll pay taxes, and I will pay my fair share of taxes. However, my fair share is going to be as low as I am legally permitted to make it. That’s right. And that comes from education. Yeah. There’s a big distinction between tax avoidance and tax evasion, right? Tax avoidance is something that I think every business owner has the right to practice. You know, if you’re W-2 listening to this, there’s a few things that we can do. If there’s a business owner listening to this, we’ve got a freaking playbook for you, right? So it’s almost like, hey, the tax code, in my opinion, is really geared towards that business owner right there. And then obviously there’s tax evasion, which will wind you up in jail, right? So, and to be honest with you, it’s not even a close line. You know, we know what evasion is. We know what avoidance practices are, right? And in general, when we’re working with clients, we want to make sure that they’re aware of all the tax avoidance strategies that are available to them.

Absolutely. Absolutely. Well, again, Alan, I really appreciate all of your time and your knowledge. Everybody go to thegenerationsofwealth.com/empoweredmoney. That’ll get you over to Alan’s information. And, man, any last thoughts before we wrap it up? Eric, I had a blast talking with you. Let’s do it again here soon.

Absolutely. Well, with that, everybody that is listening and our regulars, thank you so much for following us. And if you’re brand new, thanks for finding us. Please do what we can or do what you can to grow the Generations of Wealth show. Share it, like it, love it, all the things that need to be done to spread the knowledge and spread the word. And until the next show, have a great day. See ya. Welcome to the Generations of Wealth Podcast. I am your host, Derek Dombeck. And today, another exhilarating conversation. Gotta be honest, wasn’t quite sure of the direction that this one was going to go. But, man, Alan Franks is an awesome, awesome dude when it comes to financial planning for business owners and specifically with a real estate background. He loves the real estate world. And, you know, you can obviously see if you’re listening to this or watching this, this was a pretty long show. And the entire thing was awesome. So before I bring Alan on, though, again, I just want to shout out to everybody. Appreciation for you that have been listening. We’re pushing a little over a year now that we’ve had the show going, and it’s been a great run. We’ve got an awesome following. And if you just found us, welcome. Really appreciate you. Anything that we can do to help you, just reach out. You can send me an email directly to Derek at GlobalGOW.com. And you can always find us on our website, thegenerationsofwealth.com. You can go to derrickdombeck.com. But anything that I can do to help you, don’t hesitate. So with that all done and said, let’s bring on our guest.

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About Alan Franks