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Mark Kohler: 10 Great Write-offs, Self Directing & The Trifecta

We are talking to Mark Kohler. Mark is a personal and small business tax and legal expert who helps clients build and protect wealth through wealth management strategies and business and tax remedies often overlooked in this tricky climate. You are in for a treat because we take the complex, maybe a little boring for some of you. We’ll make it fun and interesting.

Here’s a little taste of what you’re going to discover. We talk about lawyers being liars and what that means. You’re going to love that part of the conversation because Mark is an attorney. We also talk about why an entity might not be the best thing for those of you that want to start a business right away. We talk about one of my things that is most passionate to my heart and why I do what I do here at the Get WealthFit! show and at WealthFit, taking the profits from your business and ensuring that you deploy it into investments. We talk about self-directing, opportunity shifting, the difference between privacy and asset protection. We covered the gamut in this show. If you’re in business or ever wanted to start a business, you’ve got to hear what Mark has to say. Let’s get to it. 

Dustin
Mark, you’ve worked your tail off. You graduated from the University of Utah and then picked up a Master’s in Accounting. If that wasn’t enough, you earned your law degree. What I find most fascinating is, after all that, you would write what I call a conversation starter of a book called Lawyers Are Liars. Why would you do such a thing?
Mark
I’m not a big fan of the title of that book. It was my publisher’s idea to get people to turn their heads. The reason why that title evolved into that is I’ve been a consumer advocate, helping clients not to get ripped off with asset protection schemes. “I’ve got to set up in Nevada. I need to in Delaware. I need a land trust. I need this overly elaborate structure.” It happens all the time. My first book was a warning to people of what scams are out there, asset protection and what works. What these people say a lot of times is, “Your lawyer is a liar. He doesn’t know what he’s doing. Listen to me.” They’re not even lawyers. They’re just throwing lawyers under the bus. I’m not calling lawyers liars. I’m going after those scam artists that call us lawyers liars and sell them garbage. It’s a fun book. It’s all about asset protection. It’s one of the multiple books to follow.
Dustin
Did you catch some slack from your peers, other attorneys or lawyers?
Mark
I did. It’s regrettable. If I had to do it over, I would have liked to say, “Are lawyers all liars?” or something like that. The publisher said, “You’ve got to come out strong with your first book and get people’s attention. Non-lawyers love it. I’m sometimes embarrassed. I never did a second edition.
Dustin
What surprised you in the whole process of writing and releasing your first book?
Mark
It wasn’t the topic. I’ve written other follow-up books to continue to elaborate on asset protection, privacy, tax planning, structure and all that. I’ve continued to write about that. For any of you who are out there that are budding authors, I learned this the hard way. I would go to the library or Starbucks for hours in the evenings. My wife was like, “You do it, honey.” She was so supportive. I was out there writing this book. It took me four to five months to write the book. I have this manuscript that I thought, “This is pretty good.” I went to the publisher and they were like, “Why didn’t you contact us three months ago?” I was like, “Was I supposed to?” “Yes. It takes us three months to get it to the public. At least, we could have been doing pre-promotion and editing all this chapter by chapter. We’ve got three more months before we can even announce this.” I learned that when you’re writing a book, you want to engage with your publisher and distributor as soon as possible so that there’s timing to it. You get it out much more quickly. That’s the hard lesson I learned there. Don’t hide out and write a book. Get involved with the people that are going to help you do it the right away.
Dustin
Thank you for that. We have a lot of folks that are contemplating writing a book. We’re big, strong believers in using that as a way to lead generate and make yourself the expert that people are. You’re also a CPA. You mentioned being an author but a best-selling author. You’re a national speaker, radio show host, writer, video personality for Entrepreneur.com, real estate investor and senior partner in a law firm and accounting firm. You’re an Eagle Scout to boot. Where does this insatiable drive come from?
Mark
I was born with it. Some people struggle with all sorts of things, whether it’s procrastination or laziness. It’s in their nature. We all have struggles. My struggle is trying to slow down a little bit and smelling the roses. I was a kid that was on Ritalin, hyperactive and all that. I drove my mom crazy. She was like, “If you can just channel this.” I was grateful that I was able to channel it and not end up in prison but channel it in a good way. I’ve got a neat legacy. I love studying family history, grandparents and great grandparents. I had two grandfathers on both sides of my family that were very driven. I think I inherited it from them. I’m grateful for that. You’re just born with it. You’ve got to tap into it. If you’ve got it, make it work.
Dustin
I love that passion and drive. I’m curious to go in this direction as well. I’m always fascinated by folks who are great, who I call gifted, or tearing up the world in things that are not my strengths. That would be numbers, tax and law. Where does that come from, this consummate passion and drive in this particular area? What fascinates you?
Mark
This might be interesting to a lot of people. You might know a lawyer or an accountant that’s a good lawyer or a good accountant but not good at business. There’s the business of law and the business of accounting and then there’s being an accountant. I’ve always been an entrepreneur. I was a kid that had a lemonade stand. I tried to do shuttle services in my first semester of college. I had a janitorial business to get through college, also carpet cleaning and window cleaning. I was always an entrepreneur. I loved the business of accounting and law. My talent is not that I’m a genius. I was not a straight-A student, but I was always the class president and the rallier of the troops. I was a little atypical, not your typical accountant.
I was communicative. The point is I found that my skill set was making accounting and numbers interesting and understandable to a layperson. Say you had me on a CNN panel. I was interviewed by NBC on a Skype call. If I’m on a panel with a bunch of experts, I’m not the smartest guy at the panel. You can have lawyers, accountants, SCC folks and all these talking heads nationwide. I would not be the smartest guy on the panel, but I’d be the one you could understand and you’d want to listen to. That’s my claim to fame and what I’ve tried to hone in on. Numbers are not innately easy for me. I don’t particularly love them, but I love bringing it alive to the average person.
Dustin
I am grateful and appreciative for you because that’s what it’s about. I don’t want to become an expert in that. I just want to consult folks like you that can help me get to my end goal. I want to get into your big passion, the thing that makes you tick and thrive. From my understanding, that’s helping small business owners. This is a big conversation. It makes sense for us to start with structure. Before you can operate a business, you ought to be thinking about entity creation and what structure is right for you. Do you feel that’s a fair area to start?
Mark
This is why you have experts on your show and I have experts on my podcast. Don’t be offended. I’m going to disagree with you. This is a theme of the book Lawyers Are Liars. Everybody thinks I’ve got to go out and set up my entity first. “I got my LLC. I got my corporation. I’ve got to set up in Wyoming or Nevada. I have asset protection. I’ve got to hide myself.” They spend $1,000 or more on bullcrap. I ask them when they come to my office and go, “What should I do with this? I bought it. I don’t know what to do.” I’ll say, “What’s your business?” “I’m going to do this.” “Have you done your business plan yet? Have you test-marketed it? Have you got a model and a strategic plan of how you’re going to launch this? How much money do you need? Are you going to have partners? Have you designed an execution plan to take this to market?” “I haven’t done all that.” “Why do you have an LLC?” “I thought I had to have that first.”
It’s getting the cart before the horse. I have a lot of conversations with clients right out of the gate. They call me up and go, “I need a corporation.” I’m like, “Let’s find out if you need a corporation. What’s your ten-year plan? Where do you want to be? What is this business about? How’s your marriage? Are you in debt? How’s your day job going? What’s your monthly net? Do you have a cash reserve?” All of a sudden, the whole conversation changes. Sometimes there are tears shed. Sometimes they’re like, “I’m a train wreck over here.” “The last thing you need is a corporation. Let’s get a game plan together. Let’s get the American dream coming alive for you.” They won’t be calling me if they don’t have some passion and excitement for that idea. Let’s develop that idea and then we can worry about structure.
Dustin
I remember when I first got started in this. All the books were like, “If you want to will it into existence, you need to do what successful businesses do. Go get an entity,” or some version of that. I appreciate that. I’ve grown up myself in marketing and sales and subscribed to, “Go and sell it first. You take care of all that other stuff.” I have used that over and over again. It’s refreshing. Say you’re talking to me when I first got started. I’m gung-ho on getting an entity. Where do you take people down the path? Do you ask them a bunch of questions? Where do you come in and guide, mentor or help them?
Mark
We have a law firm and an accounting firm to do those very specific tasks of company maintenance and company formation. We have five lawyers and about six CPAs. We do consultations every day with clients around the country. You don’t have to come to our office. We can share a screen or get on a phone call. When we get on that phone call with a client, whether they’re in New York, Florida, Hawaii, Arizona or Oklahoma, wherever they’re at, I ask, “What are you doing? What are you passionate about? What’s your plan? Are you married or single? Do you own your home? Are you renting? Do you have a cash reserve? Are you in debt? What’s your game plan? Do you have child support? Do you have any children? When are you getting engaged?” Those things play into a business. I want my clients to be successful with their business idea, but it has to fit into the overall life plan or we’re going to set them up for failure. I’m not trying to be a primadonna, altruistic or pat myself on the back. When I meet with my attorney, I’m the senior partner. I train my other five attorneys.
My partner, Mat Sorensen, and I have training every week. I tell them, “If they don’t need an entity, don’t sell it to them. Talk to them about their plan and get them started developing that plan. They’re going to trust us and come back when it’s time to set up that entity.” Far too many lawyers got to make ends meet. They’re going to go sell crap to people that they don’t need. They do a disservice. That’s why lawyers have a bad reputation. Why not slow down, talk to your client about maybe a debt consolidation plan and getting their life in order with the reserve? They want to buy rental property. I’m like, “You don’t even own your own home. Let’s talk about that.” Maybe they live in an area they shouldn’t. That’s the conversation. People are starving for that. Their banker and insurance agent don’t do it. Their accountant rarely does it. This is why our business is booming. I’ve got a three-week wait to talk to me because clients are like, “I don’t care what your hourly rate is. You’re going to save me ten times because I need someone that has met with 1,000 other people. They’re going to point me in the right direction.”
Dustin
Let’s say we’ve got the plan. We are generating some revenue in our business. We do have an entity in place. Would you then advise people to start thinking about minimizing taxes? I didn’t give you the full picture of what it’s like, but what’s that next conversation a business owner ought to be thinking about once they are established and are generating revenue?
Mark
This is where that initial conversation is going to evolve very quickly. Sometimes in a half-hour, we get the plan and we’re ready to go. We move into phase two. Everybody calling me is a sole proprietor. I want you tracking your expenses. You’re in startup mode. Some people say, “Where do I start with this entity stuff?” I say, “Think of a lemonade stand. Let’s say that you’re going out there to buy your sugar, cups, build your sign and table. You’re out there and mixing lemonade. Are you in business? No. You’re in startup mode. I want you to track all those expenses.” There are some people reading this who haven’t made a dollar yet in your small business. I want to know what your expenses are. You are in startup mode and a sole proprietor. Sometimes I do want to get your entity before the sale, but I want to know in that initial conversation, “Where are we headed with this? Do you have a strategic plan that makes sense?” We’re going to go down this path. I call it the Trifecta.
I want my clients to take a piece of paper and draw a line down the middle. On the left side are your operations, day job and income that’s going to help pay for groceries, clothing and underwear. On the right side are your investments. That’s going to be maybe your retirement account, rental property, stock brokerage account and your home, your primary residence. It’s left side, right side. The left side is operations. The right side, your assets and investments. At the bottom of all this is your estate plan. “Do I have my will and trust in place? What happens if I get hit by a bus? Where is everything going to go? Am I leaving a legacy for my loved ones or my friends?” That stuff has got to go somewhere. That’s the estate plan. Some people call me up and go, “I’ve got a day job. I’m making money.” I had an ER doctor and his wife was sitting and talking to me. They drove a long way. They wanted to meet me face-to-face. He was sitting and talking and they’re not starting a new business.
They’ve got an income. What they’re talking about is a rental property, which is the right side of the equation. We talked about building real estate. We’re going to use LLCs for that. We’re going to create privacy and asset protection. I have other people that call me up who are like, “I hate my day job. I want to start a small business.” We’re talking about getting into an S corporation, not a C corp. I’m going to evolve into that S corp quickly. They don’t have time for rental real estate. They need to create a daily income with operations. Some people have both. They’re building an operational business and buying rentals. They’ve got the left side and right side. What I want to do is determine in phase two with my clients, “Where’s that income coming from? Is it from assets or from labor? Is it your day job or an investment?” We’re going to create that proper structure. I’m not going to put everything in one entity. I want to have S corps for operation and LLC for holdings. That’s generally where we’re going to go.
Dustin
Is there a phase three beyond phase two?
Mark
That’s probably the exciting part of my newest book titled The Business Owner’s Guide to Financial Freedom: What Wall Street Isn’t Telling You. Now that I’m generating money, I’ve got a few assets going, maybe one rental property, an IRA, a SEP or a 401(k). I’ve got a little money in the bank. What do business owners do? Where does a business owner think their profits are best invested?
Dustin
It’s back into the business.
Mark
You got it. What happens is they put all their eggs in one basket? They don’t take profits out and diversify them into other streams of income. It’s not about a stock brokerage account of diversification. It’s about, “Where do those profits need to go? Am I going to have a second home? Am I going to do an Airbnb or VRBO? Am I going to have a rental property? Am I going to fund a 401(k)? Am I going to do a Roth IRA? Am I going to do ETFs, stocks, cryptocurrency or buy raw land?” Where is your passion that’s going to create some cashflow that’s separate from your business? Your business could fail. I had a client talk to me about $1 million of embezzlement. It almost killed them personally. It destroyed their business. If you’re putting all your money back into your business, what’s going to happen if there’s a change in the market, a problem in your business or a competitor? We’ve got to take profits out of our business and not listen to Wall Street but look at alternatives to create cashflow.
Dustin
I wish I had met you a couple of years ago. That’s why I’m here doing what I’m doing. I had a previous business. I was the same way, put it back in. I was dreaming of Silicon Valley exits. I was going to be set for life. It didn’t go down that way. That’s why I’m passionate at what I’m doing here. It’s to educate those entrepreneurs. You can work your butt off. However, you should diversify because you’d never know. Thank you for echoing that. I want to talk a little bit about minimizing taxes. It’s a favorite of everyone, deductions and where I can hold onto this money versus giving it all away through taxes and stuff. What are some of those common ones that you see out there?
Mark
I’m going to list my top five to ten. I’m going to rattle them off. This is going to blow some of your minds. I’ll let you choose what you want to hyper-focus on. When a client comes to my office, they say, “I need to save taxes.” They could be a $1,000 W-2 wage earner. They could be a small business owner or everywhere in between. They come in and say, “I want to save taxes.” I say, “Do you have a small business? If you don’t, I need one on the side.” I’m not telling people they’ve got to quit their day job. There are readers out there who have a day job. I can’t write off your cell phone, home office, travel, internet, airplane tickets and hotel when you have a day job with a W-2.
You’ve got to have something on the side. My number one strategy is having a small business to shift personal expenses into a business format, like your cell phone. If your day job is not paying for your cellphone, I need you to have a small business so I can write off your cell phone. It goes from there. Once you have a small business, it gets fun. I want to make sure you’re doing an S corporation to save on self-employment tax and get the new 199A pass-through deduction in the most efficient manner. I want to see your family members on the payroll and if you’ve got children under age eighteen or over, maybe your father or mother that you’re taking care of, niece or nephew, grandchildren. I want children on the payroll or getting a 1099.
The third is I want to maximize your retirement plan contribution. Are we going to use a 401(k), a backdoor Roth, a SEP or a front door IRA? It’s all sorts of things and everywhere in between. I want to look at your healthcare. Are we writing off an HSA, Health Savings Account, and HRA, Health Reimbursement Arrangement? What are we doing for your healthcare? Do you have big healthcare expenses or low healthcare? Should you have a high deductible plan? Number five is I’m going to talk about rental real estate everywhere I go, even to a mortician, dental conference, realtor or engineering conference. I talk about buying one rental property a year or a part thereof, learning about rental real estate and managing rental property. I want to talk about home office. Many people are afraid of it. A home office is a great write-off. I want to talk about electronics and all the little things that go with it, cameras, drones, cell phones and laptops. Anything you buy at Apple Store and Best Buy better be related to your business and a write-off.
Number eight is I want to talk about auto. This is the year of the auto. The Tax Cuts and JOBS Act made auto deductions amazing. I want to write off RVs, cars, trucks, motorcycles, airplanes and everything in between. If you’re traveling with it, I want to see how I can write it off. It brings me to number nine, travel. Every time you go somewhere, I’ve got ways to write off that travel hotel, airfare, Uber, rental cars, taxis and valet. When you travel, I want you traveling for business. I’ve got five ways to make sure your travel is a write-off. Number ten is meals. Entertainment is no longer a write-off. I want to maximize meals deduction. Every time you’re going out for food, I want you talking about business. When you’re traveling, your meals are a write-off, even if you’re by yourself. Those are my top ten. I’ve got 25 that I talked about with clients on a checklist. Those are all little things that you should be using in your small business in creative ways to make sure that everything is a write-off in converting personal expenses to business expenses.
Dustin
I start my small business so I can start taking advantage of some of these write-offs. I’m working on that first deal or waiting for that first affiliate check, online income, eBay store or whatever it is. In the first year, I’m upside down. How does that happen when you can’t fund all of those write-offs through the business? Do you loan the business money? Is that the strategy?
Mark
Let’s go back to the lemonade stand example. I’ve got my lemonade stand. You’re not in business until you sell your first cup of lemonade. If you’re in that startup mode and you haven’t made any money yet, I want you to track those expenses and keep them. I can’t write them off. When I go to do your 1040 tax return next year, those 2019 expenses go into a bucket. I’m going to use them in 2020 when you make your first dollar. You have to track your expenses. One of the best year-end tax strategies is to make some money. I can’t write off those expenses until you at least have some sales. That’s point number one. Point number two is don’t get greedy. If you got $10,000, $15,000, $20,000 write-off and $322 of affiliate income, I’m not going to write off $20,000 people. You’re going to make yourself a target for an IRS audit. Don’t get greedy. Pigs get fat and hogs get slaughtered.
I want to take $5,000, $8,000, $7,000, $10,000 worth of write-offs, take that as a loss against your W-2 and get you a little bigger refund. I can show a loss for a couple of years. The IRS, after the two years of losses in the third year, you’ve got to show a profit or you’re going to have what’s called a hobby loss. The IRS is going to go, “What’s going on? Do you suck at this or are you trying to create a tax write-off?” They’re going to question you. You want to make sure that we’re showing a profit as soon as possible. That’s what we want to do. We want to show a profit and make money. When you have losses and expenses, it’s a contribution to the business. We don’t book it as a loan. It’s going to be a loss and it’s capital contributed. A good accountant is going to take all your write-offs and show your income. In the first year, you’ll have a little bit of a loss. We want to turn that corner and show a profit as soon as we can.
Dustin
Is it true that you can write off anything as long as there’s a reasonable explanation behind it?
Mark
Let’s do some examples. Let’s have some fun with this. I was interviewed in LA on Fox News about creative year-end tax deductions that were off the chart. In Code Section 62, the IRS says that any expense related to the production of income is a write-off. As long as you’re using that expense to try to build your business, it could be a write-off. Let’s say that I’m a realtor. I sell mountain cabin property in the mountains of Vail, Colorado or Park City, Utah. There’s a line at Snowbird, which is one of the most beautiful resorts. There’s a special line for realtors because there are so many properties being shown on the mountain that realtors can fast track their clients through the line to get on the tram. That write-off was not entertainment. Their ski lift pass was a tax write-off, a business expense to show clients the property on the mountain. It’s very unique. I had another client that would show mountain property on their snowmobile. Their snowmobile is a write-off because they had taken clients on there.
Let’s go to the tropics. If you’ve got beach property and it’s an Airbnb or VRBO, that’s a great write-off. I’ve got clients that buy vacation property and turn it into a short-term rental. Whenever you go to visit that rental, that’s a tax write-off because you’re not going to stay there. You’re going to fix it up and check on it. You’re going to go paint, clean and fix something. That’s going to be a write-off. Airbnb and VRBO short-term rentals are a great strategy. I’ve got lots of podcasts, writings and YouTube videos on that. Check it out. Here’s a fun one, a service animal. Some people say, “Can I write off my dog?” If the doctor writes you a note, you’ve got anxiety, a health reimbursement arrangement or health savings account, you can take a healthcare deduction for a service animal.
That could be in your equation if that’s something that’s important to you. 30% of Americans are pet owners. Is that pet there for a medical purpose? You see more and more walking around the airport. I’ve got client salacious. Some clients come in and go, “Can I write off that plastic surgery?” There’s an IRS table on what’s a write-off and what’s not for medical. If it’s elective surgery or cosmetic, it is not a write-off. If there’s a medical reason for that nose job because you’ve got a collapsed septum or some things that would help you breathe better, that nose job might be a write-off. You can start going down the list of all sorts of fun things. I like travel, auto, meals and electronics. Most businesses should be a write-off if you can show that it’s for the production of income.
Dustin
I love the examples. It makes it real, fun and exciting. I want to talk a little bit about asset protection. I do want to preface that it’s a fun topic for a lot of people. However, if you haven’t gone and done your first deal or generated some revenue, don’t get trapped up in trying to build a Fort Knox for nothing. I’ve seen that a time or two in my walk of life. Is it true that he or she who has a bigger war chest often wins? Is it easier to settle? I’m talking in the business entrepreneur sense. People are attacking and coming at business owners and entrepreneurs.
Mark
People who are jerks, have a lot of money can threaten lawsuits, make people pay when they throw around the cachet of their lawyer and write nasty letters. It’s regrettable. For anybody out there, you’ve got assets. Maybe you have some rental properties, a big bank account with some money in it, a second home, a beach house or a cabin and some collector vehicles. Let’s go under your premise. That’s a good one. I’ve got a little bit of wealth here. That’s when you should go down that path of having an asset protection review once a year. Talk to your lawyer who’s not trying to upsell you into some elaborate structure. You should meet with a lawyer that understands accounting and taxes to some degree or a tax law firm, so we feel we’re a little more agile and helpful for a business owner. They want both answers in that same conversation.
We want to say, “What are your assets? What are your risks?” You have a teenage driver. You text and drive. You’ve got a meth lab rental versus a ski and scout or a golf course rental. If you’re doing low-income housing and mobile homes, you’re going to have more exposure than someone that’s running old folks’ homes in an elder family strategy. You want to think through your assets and risks and do a quality review once a year. You may say, “I’ve never done that. I think I’ve overdone it or underdone it.” Get a second opinion. You can come to a law firm like ours or someone else’s and pay for an hour. You’re not going to get a free consult. You get what you pay for. People pay for someone for an hour and say, “What do you think of my asset protection structure?” I’d start there. Be cautious of someone overselling some silver bullet sexy strategy. Always get a second opinion before you write a big check for some elaborate structure.
Dustin
I want to make it clear. Let’s say I’m in the education business. That’s what we are here in at WealthFit. There are a lot of edupreneurs or info-marketers. They have coaching, advice, books, products and services, very much like you. I’ve heard the strategy that your IP should be placed into one entity and you should license that to another entity. If you get a disgruntled customer or you say something bad or wrong and you get taken down, the whole ship doesn’t go down. You can start a new entity and license it to that. What are your thoughts about that? Is that right, wrong or bad?
Mark
It’s accurate. The concept is valid. On paper, that concept makes sense. We hear it. The problem is, usually, the IP of people that are sold that or go down that route is worth a lot less than they think. You’re paying for a Cadillac or a Ferrari when, really, you’re driving a Ford Pinto and no one cares. If I have a client that comes in who’s got a multimillion-dollar business and a secret sauce, some technology, methodology, maybe some trademarks or even patents and it’s got a real value, we’re going to go down that path. For anybody who’s at the very beginnings of your information-marketing career, if someone’s trying to sell you that, you need to pull back the curtain and go, “Who are these bozos?” The sad part is a lot of people giving tax and legal advice are not licensed CPAs and not lawyers. They’ve got a call center in Nevada, selling crap that people don’t need. “We got a lawyer that reviews all this.” Be cautious, get a second opinion. 
Dustin
In your book, The Business Owner’s Guide to Financial Freedom, you talk about successfully investing in businesses while bypassing Wall-Street-influenced financial planners. Are you not a fan of financial planners on a macro? What’s there for you?
Mark
I’m going into the studio to talk about five ways to get 10% to 15% annual returns inside your Roth, IRA or 401(k). Those are fighting words. I did a YouTube video that’s got over 100,000 views of people who are so grateful for the refreshing advice. I felt like it was the Salem witch trials. I had spoken heresy that you could build $1 million Roth IRA. It was insane. This opens a whole can of worms. I’ll make two or three major points. You can hyper-focus on the part that you might prefer. Even in Tony Robbins’ book, Unshakeable, and Warren Buffett has been very vocal about this too, 95% of all financial advisors and broker-dealers are captive.
Some of you reading this hate it when I say it but it’s true. They are encouraged, if not required, or stuck with selling whatever their broker-dealer’s flavor of the month, whether it’s a certain ETF, mutual fund or another stock-bond or mutual fund. They don’t have a fiduciary duty to sell you or tell you what’s best. They have a duty to sell you something that you could afford losing. There’s a special terminology for it in my book. Even Tony Robbins goes through a checklist in his book. I quote him in mine. Who is a financial advisor that is truly independent and can talk about what’s best for you, whether it’s real estate, self-directing or building your business?
This is what Wall Street can’t tell you. They’re not allowed to say that or they get fired. That’s point number one. Study it. If you don’t like what I said, if you think it’s heresy or crazy, you do a little bit of research. You’ll find out that Wall Street is not looking out for your best interest. The fees buried in 401(k)s are sickening. Warren Buffett talks about this as well. This is why ETFs and no-load ETFs are so popular, also exchange-traded funds. Start to research these. The second point is I want clients to self-direct. It means investing in what you know best. This can be fighting words. Even Jim Cramer on Mad Money on CNN hit buttons, bells, whistles and horns. He’s like, “Let Wall Street invest for you. We know what’s best. If you start self-directing prohibited transactions, you’re going to lose your retirement and make a stupid decision.” I have a lot of clients that know how to make money in their personal lives and business. Let your retirement account do it. It’s called opportunity shifting.
Here’s one last example. Clients will come in and go, “I’m fixing and flipping properties. I love watching Chip and Joanna down in Waco. I love that show, Fixer Upper. I’m going to fix and flip five properties this year. Show me how to save money.” I’ll say, “Only flip four properties.” “I got five properties picked out. Why aren’t you telling me not to flip that fifth property? That’s stupid. I can make another $50,000 doing it.” I’ll say, “Don’t do it. Let your IRA do it. Let your 401(k) do it.” “Do you mean my IRA can buy real estate and flip a property?” “Yeah.” There are some rules on how much service you can provide to it, how you do it and the process. You’re not going to borrow from your IRA. There’s not going to be any taxes and no penalties. Your IRA can buy real estate. It can invest in venture capital.
It can invest in a restaurant. It can buy tax liens and do trust deed loans. “Why didn’t my stockbroker tell me this?” It’s because they don’t get a commission. It’s called self-directing. It’s been around for years. It’s funny when Mitt Romney was doing his presidential debates with President Obama. He did his financial disclosure. He had a $20 million IRA. They were like, “How can you have a $20 million IRA?” He goes, “I self-direct. Don’t you? I invest in what I know. I don’t buy stocks. You don’t get rich from buying Facebook.” You get rich investing your IRA and what you know best. Wall Street was like, “Don’t talk about it.” It was on the thirteenth page of The Wall Street Journal. People learn about self-directing. Invest in what you know. You can do it. Your stockbroker can’t but you can.
Dustin
Is it more of a mindset thing? I want to get into the root of this. For the busy entrepreneur, they love what they do every day. They’re doing it. They’re putting their money. They focus back into the business. What do you tell that entrepreneur who isn’t into rentals or doesn’t know the stock game but they’re building their thing? Is it like, “You need to shift your mindset because that business may go under or you may have a rough time?” Where do you tell that person to start or go?
Mark
I have a client down in Texas. He’s good at restaurants. He’s making good money at restaurants, but he’s expanded. There are different terms as you go to college and work in a business school. It’s called vertically integrating or horizontal integration. What you do is start looking at expanding your business into other related industries. This is the diversification model. It’s a business owner who’s good at his business but has no time for investing on the side. What should he do? He’s got to slap himself in the face and go, “I need to diversify a little bit. Maybe I should start investing in my chain vertically or horizontally. If I’m a restaurant, maybe I better start investing in food production, food delivery, doing catering or packaging and selling in grocery stores. I need to diversify my model.” You never know when your business might be affected in some major way where you’re not making the same profit you thought. If you’re in restaurants, start going into entertainment in your restaurants, food delivery or production. You can’t have all your eggs in one basket. That’s the bottom line.
Dustin
I love that you didn’t direct. Everyone should further educate. That’s why we exist here at the Get WealthFit show and at WealthFit. It’s to look into those other forms. I love your first piece of advice there, which is to look for the opportunities that are around you and the thing that you love. They’re there. You’ve just got to look for them. There are many nuggets in this episode. What are you working on now? What are you most excited about these days?
Mark
There’s a lot I’m doing. I’m going to throw out one more tip. I feel prompted to share this. It’s probably not my number one focus but we’re pretty excited about that. There’s a difference between privacy and asset protection. This is important. A lot of people think, “I’ll set up a land trust,” or “I’ll set this up to hide.” Hiding is an important part of asset protection. Using mail forwarding services, doing your company maintenance, not putting your name on everything and creating a little privacy. Identity theft is a huge issue, a white-collar crime of people trying to scam based on data that’s everywhere. If you start Googling your own name, you’re going to freak out what’s out there.
I have a lot of clients who are very concerned about privacy. Privacy works hand in hand with asset protection. I’m going to use entities, insurance, good liability protection strategies, but also privacy and not put my name on everything out there. Use address protection. I love the book by JJ Luna, How to Be Invisible. It’s a great book. Google JJ Luna and start learning about privacy. Think of a bulletproof vest in camouflage. Is one good unto itself? Yeah, but they’re better together. Wouldn’t we want a camouflage around my bulletproof vest? I’m getting both benefits in a more coordinated strategy. Be cautious hanging your hat on one of those. Try to bring them together.
Dustin
I appreciate you bringing the value and the goods in the show. For folks who want to continue the conversation, check out the books that you mentioned and maybe check out the firms that you own and operate, what’s the best way for people to do that?
Mark
Thank you so much. Google Mark J Kohler, you’ll find my YouTube channel with 70-plus videos and over a million views. You’ll see my books on Amazon. My website MarkJKohler.com is a great place to sign up for our weekly free newsletter. I’ve been doing it for a few years now. Tap into it. Check me out. Start drinking a little Kool-Aid. Test it out. See if you like the flavor and compare it against the advice you’re getting from other professionals. I’m not saying you’ve got to buy everything I’m selling but start using it as a resource to compare against the advice you’re getting. You should have two to three tax and legal experts in your quiver of arrows. I want to be one of them. Give us a shot. Start listening to what we’re talking about. We’ve got a great podcast on iTunes and Stitcher called Refresh Your Wealth. It’s fun. I’m trying to change the world.
Dustin
Thank you big time for doing what you do in the world and making it simpler for us to understand and leverage to get what we desire. 
Mark
Thanks for having me. I love what you’re doing at Get WealthFit. Keep doing it.

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