Retired, Rich, And Going Broke!: How to Engage the Family Office Model to Build and Protect Your Wealth, Guard It from Prying eyes-Including the IRS-and Help the Next Generation Continue Your Legacy

By Conrad Tarte

AVOIDING THE UNTHINKABLE.

How much thought have you given to your financial future?

With impending pension problems and real issues arising surrounding Social Security, combined with Americans' longer life spans these days, planning for a secure retirement is more important than ever. But it c

• Language: English
• Publisher: COMMERCIAL INVESTMENTS INT'L, INC.
• Release date: Aug 10, 2021
• ISBN: 9781735111278

Conrad Tarte

CONRAD TARTE and his team at Continental Nine have always been dedicated to a primary goal: helping people. In fact, that's why Tarte got into financial management in the first place. When he founded his company, long before internet, he and his team began to look for the areas that had the largest effect on one's wealth, so they could provide the most help. They also decided to focus on a group in desperate need of that help-one that is often overlooked: retirees. He and his team knew that if anyone needed assistance, it was retirees-people who would have to make their money last for the rest of their lives, and hopefully provide for the next generation. That's who his company serves today, operating independently to provide complete objectivity and ensure they can always put their clients first. Continental Nine takes a family office approach, employing the same strategies ultra-wealthy families do-including the personalized and comprehensive attention they receive-for all of the company's clients. The result is thoughtful, thorough, and comprehensive support for everyone Continental Nine serves. With his first book, Retired, Rich, and Going Broke, Tarte and his team are here to help you too.

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INTRODUCTION

From Curious Kid to Financial Advisor

When I was in college, I lived in a small room in a private residence. My landlord, a local attorney named David, had four extra bedrooms in his house that he rented out to students.

One day we both came home at the same time, and I stopped to chat with him. You’re an attorney, I said. Why do you rent rooms in your house? It was hard for me to understand why he’d want a bunch of college kids around his home, since he had a wife and three young kids. Why would he want to interfere with his family life by renting those rooms?

He replied, Because of the tax benefits I get. At all of seventeen years old (yes, I was seventeen at the time), I had no idea what he meant by that; taxes and real estate were still a mystery to me at that point.

I said, Wow. David, could you show me how that works? Could you teach me the tax benefits of owning real estate like this?

Sure, he said, and he pulled out his business card and handed it to me. Here. Call my office and speak to my secretary. She’ll make an appointment for you. By the way, I’ll take as much time as you need, but I charge a hundred fifty bucks an hour.

At first I was embarrassed that I’d even asked him. But then I became angry. After all, I was his tenant, and he wanted to charge me to show me how to get tax write-offs? Maybe if I’d had the money I would have felt differently, but as it was I barely had enough to eat. What this guy wanted to charge me per hour was more than I made in a month.

Still, I really wanted to know what he meant—how renting rooms gave him a tax benefit. Then it occurred to me to check in with my accounting professor at school, who was also a CPA—Professor Harold Champ Soncrant. Maybe he could explain it to me. I got to class early the next day and told him the story of my encounter with my landlord.

He said, Are you kidding me? That’s ridiculous! If you’ve got time at lunch tomorrow, let’s make an appointment. I’m going to show you how this works, and I’m not going to charge you! And with that kindness, he changed my life forever, not to mention teaching me the most I recall learning in college.

The next day, I met Dr. Soncrant during my lunch break. He spent the whole hour with me, showing me step by step on the blackboard how it worked. I was hungry for more, so I asked him, Where can I obtain or read more information about this? Are there any books in the library I can read?

He said, I’ll do one better than that, and he wrote down a phone number with some titles. Here, call this phone number and ask for these publications, he said.

That afternoon, I called the 800 number he’d given me, which turned out to be the IRS office. I asked them for the tax literature Professor Soncrant had recommended, and within a few days they shipped me two big boxes—all the tax rules, and all the tax forms, including everything that one needed to do taxes.

When I got the box, I was a bit anxious at first. Holy s**t, I said, they’re going to charge me for this. But it turned out it was free. They didn’t charge anybody for their information. In there was a whole section about real estate and how the tax benefits worked.

I spent my whole summer vacation reading those books, and I learned how to do taxes for rental properties. I got so good at it that everybody I knew began to ask me if I could help them with their taxes. Then people would start to ask me, I just bought this insurance product; what do you think? or I’m planning to make this investment; what do you think about it? I said, You know, I don’t know, but let me do some research, and I’ll find out for you.

And that’s how our business started.

My Path to Becoming a Financial Advisor

I was the kind of child who had a habit of listening to adult conversations, quietly taking it all in without being noticed. I was particularly curious about financial conversations. I would overhear that a family friend or relative had lost their shirt in the stock market, discovered the hard way that Social Security wasn’t nearly enough to live on in retirement, or gotten wiped out by attorney fees after the death of a spouse. I remember thinking, Geez, is this what adulthood has to offer? I didn’t want to become a victim. I was determined to set a different course that wouldn’t end in financial ruin.

By the time I reached my early twenties, I had decided to learn everything I could about finance. This was the early 1970s, and there was much less information out there about finances and investing than there is today. I checked with a number of schools, but none of them offered courses that I felt could help me, so I decided to direct my own research. I went to the local library and began reading everything I could get my hands on about finance, investing, economics, tax shelters, estate planning, taxes, laws, and more …

I began to realize that most of the available information was very confusing. If I’m confused even after reading all this stuff, I thought, I wonder how the average person deals with this? I followed the news and read about situations in which rich and famous actors and athletes lost fortunes because they’d gotten involved in bad investments and failed business dealings. These were very wealthy people who could afford the best advice, and yet they’d been taken advantage of too. If this kind of thing could happen to them, I wondered, then what happens to the average investor? How can they stand a chance?

This realization led me to my calling. I decided to offer a type of financial planning with comprehensive support to help ordinary people avoid these pitfalls. I sought to fill a need; it wasn’t about following a defined career path to become a financial advisor. No such occupation existed at the time.

Back in the seventies and early eighties, no companies were doing the type of advisory that we do today. There were stockbrokers, insurance agents, CPAs, and lawyers but no advisors that I knew of. People told me that what I wanted to do was technically illegal and said I needed to be a lawyer or CPA. At the time, I had only completed an associate’s degree in business, so I was certainly outranked. Thankfully, I was not deterred. I knew there had to be a way to help clients analyze investment products from a clear financial standpoint—a way to put my growing expertise to good use. What I wanted to do was different from what these other professionals were doing. I wanted to create a new model, one that capitalized on an existing one: the family office model—the comprehensive financial advice and support that wealthy families receive. But instead of reserving our services only for the wealthy, my team and I would provide it to all the clients we felt could benefit from our services.

And though I did go back to school in the early eighties to get a BS and juris doctorate, none of these formal accolades gave me the education I received for free in college from one great professor and a box from the IRS.

CHAPTER 1

Why We Created This Business

With all that has been written about building and preserving wealth, you would think that most people would have figured out by now how to plan, how to select suitable investment products and services for themselves, and how money and markets work. But that does not seem to be the case. Many people live successful lives and work successful careers but still end up retired, rich, and going broke!

With all the high-pressure sales tactics consumers are subjected to, it’s no wonder they’re easily confused.

Indeed, consumers appear to be more in the dark than ever before. With all the high-pressure sales tactics consumers are subjected to, it’s no wonder they’re easily confused—and, surprisingly, even seasoned financial professionals can often be swayed by savvy marketing pitches.

Some major financial firms with large marketing budgets will promote or attempt to sell you a product that puts money in their pocket first, and you get what’s left—the crumbs, as we say. You’ve seen their massive buildings and creative TV commercials, and you can imagine the perks they pull in—pensions, bonuses, holidays, and ultimately golden parachutes. The average person doesn’t get half the benefits that the people managing their money do when working with these so-called big players.

I would describe the way different planners behave as falling into one of these three categories—and no matter what, they are all eager to accept your money. Some are supporters who want you to believe they really have your best interest at heart. Then there are hunters—planners who see the investor as nothing more than a cash cow and are constantly looking for more. Finally, there are manipulators—opportunistic planners who misrepresent the world we live in to their advantage.

Fortunately, you can take a look at what they’re offering and determine if it may be worth your while. We recommend that you evaluate all investment plans using the following intrinsic criteria at a minimum:

• Liquidity : Is the plan liquid? Can you turn the investment into immediate cash at will?

• Taxability : How is the product taxed? Is it current, deferred, or advantaged-type taxation?

• Net returns : Are the stated returns net or gross before surrender fees?

• Government influence : Does this product react to changes in government policy or regulations? For example, Social Security was never supposed to be taxable, but now it is—for some people. Do you think Roth IRAs will follow suit?

• Ease of use : Is it easy to see and access information about performance?

• Keeping up with rising interest rates : Does the plan react to rising interest rates in a manner that could benefit you?

• Penalties : If you need to liquidate an account, are the penalties reasonable?

• Control : Who controls the funds? Can you access your money on your own?

There are other considerations as well, including market risk, inflation, and interest rate risk, among others. But while these factors are important, they are external. If an investment doesn’t meet these minimum criteria, we tend to view it cautiously. Some products and solutions sound compelling, but when we apply our simple standards and strip them apart, we find they fail to measure up.

Though these criteria seem simple to us, we understand that they can be complicated for the average consumer. If you don’t want to go it alone by dissecting the products you’re offered on your own, you don’t have to. Today there are specialists who can address almost any challenging financial dilemma you may have, from selecting the right Social Security options to finding the right school for your children. According to leading financial industry research firm Cerulli, there are over 310,000 financial planners in the US.¹ Unfortunately, while finding an advisor is simple, finding one who is available to you is more challenging. Most competent advisors can effectively handle only so many clients, and that means that many people don’t have an advisor at all, or they have one who can’t answer all their questions. A study by Northwestern Mutual found that

• 62 percent of the 2,636 people surveyed did not have a comprehensive lifetime financial planner;

• 32 percent used different advisors to assist them with different functions, such as investments, insurance, and retirement planning; and

• about half weren’t sure who to talk to when they needed financial advice. ²

The Firm for You

For those who join the masses of investors who seek out a national or name-brand financial firm that promotes low-cost funds, or products depicted as guaranteed, their planning choices are often limited, and so are the services they receive. But finding someone who specializes in truly individualized needs—comprehensive tax and investment advisors who track US and global economic trends and government policy and can interpret the effects those trends and policies may have—requires looking a little harder. Why? The more successful and reputable the firm, the less often you hear about them. They don’t take walk-ins, solicit, make cold calls, or generally advertise. Their clientele typically comes to them through word-of-mouth referrals from other satisfied clients. A reputable firm, or one that becomes more successful, tends to provide more affordable services for their clients instead of pouring revenue back into advertising.

A serious and effective professional will call on you to keep you abreast of new laws or regulations, among other things, that may affect your asset-protection plans, federal and state tax changes, changes in estate-settlement procedures, and identity theft risks, to