Bill Neville (04:08):

And he set up these licensing agreements where they paid money to Entrust, to sort of use Entrust documents, we provided documents in training and all these things. And over the years, he inadvertently found himself running a franchise program. At the time that I got hired, and needed someone to sort of oversee this program, and so I got hired as manager of franchise operations.

Bill Neville (04:30):

And about six months into the position, he decided that he didn’t want to have the franchises anymore, he just wanted to be the Self-directed IRA custodian and record keeper without the franchise program. So if you don’t have a franchise program, you don’t need to manage your franchise operations.

Bill Neville (04:45):

But I really liked the company, I liked the work that we were doing, it was new to me. And so about a year or so in after we settled the separation and dissolving the franchise program, and all those franchises are now operating as their own businesses. I was moved over to oversee our compliance and internal audit, which I did for a few years.

Bill Neville (05:04):

I really liked the business that we were in, I didn’t really necessarily like that specific work that I was doing. And it was very solitary, and I’m a little bit more of a social guy. And we had this business development management position that was open, and so I expressed an interest in that, and so that was about six years ago that I moved over from the compliance business development, which is the role that I hold now.

Bill Neville (05:26):

My role is to educate people about what Self-directed IRAS are. So like this conversation that we’re going to be having today, these are conversations that I basically have pretty much on a daily basis, with people explaining what the rules are, and what you’re allowed to do, what you can’t do, etc, etc.

Bill Neville (05:41):

But I mean, ultimately, I would just happen to stumble upon a LinkedIn ad, that happened to be the interest group, and I sent my resume and got hired, and that’s how I ended up with interest, it’s been over 10 years now. And I feel very fortunate that I did, because I really, really enjoy the service that we provide.

Bill Neville (05:56):

I think a lot of people should know about self-directed IRAS. Not that necessarily everybody should have a self-directed IRA, but I think it’s important that people know that they exist.

Bill Neville (06:04):

And so my job is essentially to try and get the word out that this is a thing that you can do. And because I feel strongly that people should know about it, it makes it easy for me. If anything, people I feel like tell me, “Okay, so I’m talking about Self-directed IRAS, I’ve heard enough.”

Robert Leonard (06:19):

Well, I can speak for the audience and myself. I’m glad you stumbled on to that LinkedIn ad, because I know we’re going to learn a lot from you today. It’s important concepts, I mentioned this before our call. I’ve studied SDIRAs a bit, and I’m excited for the audience to learn more about it.

Robert Leonard (06:34):

So let’s start our deep dive into Self-directed IRAS, which are also referred to as SDIRAs, from a high level, and then we’ll drill our way down into the details. To start, what is a Self-directed IRA, and how is it different than a normal IRA that most people are familiar with?

Bill Neville (06:55):

Sure. So to have a retirement account, it requires you to have a custodian, that’s a general rule around retirement accounts, is that it requires a custodian to hold the assets, and hold the cash, and you instruct your custodian to make investments that you want to make. And most people’s custodian that they have their account with is a bank or brokerage firm.

Bill Neville (07:15):

And most banks and brokerage firms, the only assets that they’re willing to process and hold, are publicly traded stocks, bonds, mutual funds. So for that reason, most people think that the only things you’re allowed to invest inside a retirement account are publicly traded stocks, bonds, and mutual funds. But in reality, the IRS says, “No, you can invest in almost anything you want.”

Bill Neville (07:34):

And we’ll talk a little bit, I know, it’s one of the questions, we’ll talk a little bit about what you can’t invest in. But you can invest in almost anything you want, but you have to have your account with a custodian, who is willing to hold whatever asset it is that you want to invest in.

Bill Neville (07:47):

So the definition of a Self-directed retirement account, a true Self-directed retirement account is one, the custodian doesn’t give you advice, right? So we don’t have advisors, we don’t do any due diligence on the investment you want to make, we strictly provide all the custodians with record-keeping services, to help you be compliant and legal to hold whatever asset you want to invest in, inside your retirement account. So that’s one definition of a Self-directed retirement account.

Bill Neville (08:12):

The other definition is that you can invest in non-traditional assets and that a non-traditional asset is anything other than a publicly-traded stock bond on the mutual fund. So if you want to buy a rental property, or if you want to invest in a startup company, or promissory notes, or tax liens, or trust deeds, or cryptocurrency, or precious metals, I could go on and on.

Bill Neville (08:30):

The IRS allows you to do that, you’re allowed to make that investment inside your retirement account, but you have to have your account with a self-directed custodian. So you hear self-directed IRAS, but we’re a self-directed custodian. So any accounts you have with us, by definition, is a self-directed retirement account.

Bill Neville (08:46):

So we do have IRAs, Roth, traditional, SEP, SIMPLE IRAs, but we also have a 401(k), so you can self-direct the 401k. We have a health savings account, you can self-direct your health savings account, and a Coverdell educational savings account. You can self-direct the Coverdale educational savings account.

Bill Neville (09:02):

So again, the definition of self-direction means one, you make all your investment decisions. You don’t get advice or any due diligence done by the custodian, and two, you can invest in non-traditional assets.

Robert Leonard (09:14):

If somebody’s listening is thinking to themselves, “All right, I understand it’s a retirement account with the individual investor in charge making all the investment decisions.” They might be saying to themselves, “But I already do that with my IRA, and I even do that with my 401(k). I go in. I pick my mutual funds that I want to invest in. I pick whatever stocks and things I want to buy.” So how is the SDIRA rate different from a 401(k)?

Bill Neville (09:38):

Because you can only invest… The custodian you have your account with, they’re probably only letting you invest in stocks, bonds, mutual funds. So if you went to that custodian and said, “Hey, I found this great rental property, I want to use that, I want to buy that inside my retirement account.” That custodian unless they’re self-directed custodians, the likelihood is they’re going to say, “I’m sorry, we don’t do that.”

Bill Neville (09:58):

They may even tell you you’re not allowed to do that. I’ve had people call me up, and say that they’re Merrill Edge or Charles Schwab, not to call out anybody in particular, it could be any of those brokerage firms, Edward Jones, or somebody that like, “I talked to my guy, and he said you can’t invest in real estate inside a retirement account.”

Bill Neville (10:13):

And my response to them is, “You can’t invest in that in your retirement account with them, that doesn’t mean you can’t invest in that with your retirement account at all, you just need a custodian who’s willing to hold that investment.”

Bill Neville (10:25):

And that’s where the interest group that our competitors, the other firms that are in the Self-directed space, that’s where we come in, and we fill that void. We provide all the custodial record-keeping services to allow you to invest in nontraditional assets.

Robert Leonard (10:39):

Yeah, that’s something I actually hear a lot, is I hear people say, “You can’t buy that [inaudible 00:10:43] retirement accounts.” So I talked to my guy, just like you just said, they say, “I talked to my guy, I talked to my financial advisor, you can’t do that.” And that’s because they’re wrong, and they’re not talking about the right account.

Bill Neville (10:53):

Right. Again, I heard it. CPAs have told people that, it’s people that you would think that would know better, actually aren’t aware of it. Even though this has always been allowed, since [inaudible 00:11:04] went into effect in the mid-1970s, you’ve always been allowed to buy real estate, and private placements and blah, blah, blah.

Bill Neville (11:11):

But the bank and brokerage firms sort of co-opted the whole retirement accounts space, and that’s who most people have their retirement accounts, and that’s what most people think that the only thing you’re allowed to invest in. So it’s ultimately like some of these people are either flat out wrong or they’re being a little deceptive. Maybe they know.

Bill Neville (11:28):

But again, you can’t invest in that with us as custodian, us being one of the banks or brokerage firms, but you can invest in other companies. To be fair, I get calls from people that some of those brokerage firms, like I call it out.

Bill Neville (11:41):

I get Edward Jones brokers, and I get Merrill Edge and Charles Schwab, and some of these guys who call me up, and say, “I have an account holder who asked me about this, and I told him I’d look into it, and so I wanted to pick your brain and find out more about it.”

Bill Neville (11:52):

So I don’t want to call anybody out and say they’re all really bad. I get plenty of them who want to do [a] lookout for the best interest of their account holder, and they don’t know anything about it, and they do the research. And they contact me, and we have conversations, and they learn, and then they pass that information on to their [inaudible 00:12:08], but there are certainly some who get bad information.

Bill Neville (12:11):

And then they have to do their own due diligence, they have to go in, they have to do their own research, and they stumble across this thing called Self-directed IRAS. And people who are real estate investors, who are note investors, fix and flippers, they tend to already know that we exist.

Bill Neville (12:27):

These are the people who are reading Rich Dad, Poor Dad, and are on BiggerPockets and who are listening to podcasts like this, who are educating themselves. They tend to know because they’re coming across the time. You read a lot of these real estate investing books. There’s going to be a section that talks about self-directed IRAS, right?

Bill Neville (12:45):

But it’s the people who aren’t really doing the due diligence. And to be honest with you, the people who aren’t doing that level of due diligence, it’s probably best, they don’t have a Self-directed IRA, to be honest with you. Because the requirement of a Self-directed IRA is that the account holder does all their own, like they make their investment decision. It’s on them to do all their own due diligence.

Bill Neville (13:04):

And if they’re not doing that, if they don’t have the energy, or the interest, or the time, then you’re probably better off having it with a brokerage firm, and letting that advisor instruct you what funds and stocks to invest in.

Bill Neville (13:16):

A Self-directed IRA is really geared towards people who are doing the legwork and educating themselves about the types of investments that they want to bank.

Robert Leonard (13:25):

The interesting thing, most interesting, I think that you mentioned is that a lot of times, it is these well-educated people that tell others that maybe somebody knows their brother is a CPA, or their cousin’s a certified financial planner, or whatever the case is, somebody that they think should know, and they go to them, and they don’t know, like you said, I don’t think they’re being deceitful, they just literally don’t know about it.

Robert Leonard (13:46):

And so when you get this advice from somebody that seems like they’re well educated, it’s hard to believe that there’s something else out there when somebody, educators [are] telling you there isn’t. Now the other side of that is incentives. And Charlie Munger, somebody I study a lot, and one of his favorite things is to look at incentives.

Robert Leonard (14:04):

And I’m not saying this is all, or even most of the financial advisors, but there are some financial advisors that maybe not a fiduciary, and so they’re incentivized, and they’re not fee-only, so they get paid based on how much assets they have under management.

Robert Leonard (14:18):

And if you leave their firm, and take your funds to an SDIRA, now they’re not making money off of you, and so they’re not incentivized to tell you, “Hey, you have an SDIRA over here.” And we talked about that on the show, because a lot of financial advisors don’t recommend real estate. And so it’s because of that incentive, right?

Bill Neville (14:36):

Yeah, they don’t have a way to make money on [it].

Robert Leonard (14:39):

Exactly. So just know that when you’re looking for anything, SDIRAs, or any other financial topic, just know that just because somebody says it doesn’t exist, or it’s not possible, doesn’t necessarily mean it’s 100% the case.

Bill Neville (14:50):

Yeah, or you get the brokers who look at the way they’re paid, if they’re compensated by…They get a commission when they sell a fund, right? Or there’s a percentage of that that goes back to the firm, that goes then on to the broker that sells that fund, or sells a bond, or something like that. And so they’re incentivized to sell you something that their firm is going to then pay a commission on.

Robert Leonard (15:12):

Neither of us is saying that this is everybody, but there are some cases where that is, unfortunately, the situation.

Bill Neville (15:18):

Yeah, for sure.

Robert Leonard (15:20):

You mentioned briefly, the types of assets that we can purchase with this SDIRA, give us a little bit more color on those, what can we buy with our Self-directed IRA, and what can’t we buy it? And we talked a lot about what you can, what can’t you?

Bill Neville (15:34):

Yeah, I mean, there are only three asset types that you’re not allowed to invest in, collectibles, life insurance, and S corporation. So you can invest in any corporate structure except for S corporations. So you can invest in LLC as a limited partnership, C Corp, etc. But if a company is structured as an S corporation, your IRA can’t invest in [it].

Bill Neville (15:53):

Then collectibles, which would be works of art, alcoholic beverages, coin collections, which is not to be differentiated from foreign currency, you can invest in foreign currency, you can’t invest in, let’s say, a coin collection. You can invest in metals, but the metals have to be a certain [type of] finance, right?

Bill Neville (16:10):

So there are dealers out there that sell investment-grade metals, and then there are dealers out there that sell basically collectibles, right? And so your IRA can’t hold collectibles. The example I always use is your IRA can’t invest in wine, right? Like you can’t buy and hold wine, but your IRA can invest in a winery. Your IRA can’t invest in art, but your IRA can invest in an art gallery.

Bill Neville (16:31):

So there’s a difference between what’s an investment like a business, versus what’s a collectible, and then life insurance. So other than that, your IRA can invest in pretty much anything you want. We had somebody invest in a racehorse, in a cattle, in a bowling alley, in an airplane, but the key is that all these things have to be for investment purposes, right?

Bill Neville (16:52):

So there are rules around what’s considered a prohibited transaction, and to give the most obvious, and sort of straightforward example, that most black and white example of that, is if you want to use your IRA to buy a rental property, you can’t use that IRA property for personal use, right? It has to be for investment purposes.

Bill Neville (17:08):

So there are certain people that are considered disqualified persons that can’t ever stay in that property, or put in physical labor on that property. So it’s you as the account holder, your spouse, your ancestors, so parents, grandparents, your lineal descendants, children, grandchildren, and then spouses of lineal descendants, and then also fiduciary, so if you have a CPA, or a lawyer or something like that, then probably be considered disqualified.

Bill Neville (17:29):

And we might be getting ahead of ourselves when we get into the actual real estate part of it. But the point is, is that in terms of types of assets, there’s only three. So as long as the investment that you want to make, like to some extent, you’re only limited by your imagination. But the key is that what you use has to be for investment purposes only.

Bill Neville (17:47):

So we had somebody invest in, like I said, in an airplane. They can’t fly that airplane themselves, they can’t use that airplane themselves, it has to be investment, where perhaps they pay a pilot, and they’re leasing out the airplane, and the IRA owns the plane or owned the plane in the instance where we had it, and then they released it.

Bill Neville (18:03):

And then the payments were getting paid directly to the IRA, the IRA owned the airplane as an investment, but again, there are certain people that were disqualified from using that airplane for personal use.

Robert Leonard (18:15):

You didn’t mention it as a disqualified asset, and it doesn’t necessarily fall into any of the categories I don’t think, so I’m guessing that the answer is, yes. But it’s something that I’ve actually taken quite a bit of interest in lately, so I’m curious, a little bit selfishly, can you invest in equity crowdfunding using an SDIRA?

Bill Neville (18:34):

Absolutely, yeah. I mean, when there are crowdfunding sites that popped up after the JOBS Act went into place. And crowdfunding is a very general term, where anybody is raising capital from a large group. So, you can set up a syndication. You can establish an LLC that you want to invest in a large apartment complex, for example.

Bill Neville (18:54):

And you’re going to raise capital from a bunch of different people, who are going to put money into that LLC, then you’re going to use that LLC to go turn around, and buy that property. That’s technically crowdfunding, you’re using that to raise money.

Bill Neville (19:05):

But the term crowdfunding that really popped up came after the JOBS Act, where it established certain parameters around depending upon your salary, you can invest a certain dollar amount and become an investor in a private play in a privately held company.

Bill Neville (19:21):

That used to be limited just to institutional investors, or the wealthy where you can get in early on, let’s say, a Lyft, or an Uber or somebody like that, and then when it goes public, you make a whole ton of money.

Bill Neville (19:33):

The crowdfunding, the JOBS Act opened the ability to non-accredited investors, basically general investors to be able to come in at a very small dollar amount, and now all of a sudden have the potential to invest in a pre IPO type of offering, again, like a lift or some startup, and then when it goes public, then you own a ton of money.

Bill Neville (19:51):

But in order to meet the JOBS Act, you had to establish these sites, these crowdfunding sites, where they had to meet certain qualifications to be a site. But all those sites, they all accept IRA money, and a lot of them have very specific relationships. We have, I guess, I don’t want to promote any in particular, but there’s one that, if you want to invest in one of their offerings, you have to use Entrust, they are exclusive with us.

Bill Neville (20:16):

There are others that refer clients to [inaudible 00:20:18], who I know that were on a list of four or five different self-directed IRA companies, and then these guys call around and say, “Hey, I want to invest through this crowdfunding portal, and they gave me your name, among others, and I just wanted to find out, talk to you about your process, how long you’ve been in business, blah, blah, blah.” And then they decide who they want to use.

Bill Neville (20:35):

I mean, that’s a very common investment, we process crowdfunding transactions on a daily basis, at least a few that we do on a daily basis, like, it’s that popular.

Robert Leonard (20:45):

This is probably going to be a little bit nuanced, but let’s just say somebody is already investing in crowdfunding with non-retirement money, they have some savings that they put into crowdfunding on a platform.

Robert Leonard (20:55):

Do they have to open a new account with that crowdfunding website to put that money in, or can you kind of commingle retirement money into that investment account that’s already there? How does separation work, how does that all work tactically?

Bill Neville (21:09):

Yeah, and you have to establish an account with that crowdfunding site in the name of your IRA. So if you also have a personal account, where you’re investing personal funds, you have to establish a second account in the name of your IRA.

Bill Neville (21:20):

Now you can partner those two into the same investment like the IRS allows what’s called partnering, it’s an industry term that we use, where you’re using both your IRA money and also potentially personal. Or let’s say you have a traditional and a Roth, those are two separate accounts that can be partnered into the same investment.

Bill Neville (21:37):

So with crowdfunding sites, because the IRA is the entity that’s making the investment, the individual when you’re using your retirement account, that investment is not structured in your personal name, it’s structured In the name of your IRA. So standard naming convention is some version of custodian name for benefit of the client’s name and account number.

Bill Neville (21:57):

So with us when you make an investment in anything, real estate, a private placement, precious metals, promissory notes, whatever, the name of the investor that goes on the agreement, is the interest group, FBO, for benefit of that stands for, the interest group FBO, the account holders name, and their account number.

Bill Neville (22:14):

So if you’re going to invest through on a crowdfunding site, and most crowdfunding sites actually have that as an option, when you go to establish an account with them, they’ll ask you, I think all of them do at this point. But I know the ones that work with us, they’ll come up with a box, which is [inaudible 00:22:28] account, your name, or the name of your IRA.

Bill Neville (22:30):

And then whenever you check on your IRA, then it’s going to ask you, who’s the custodian, what’s your account number, it’s going to ask you the questions. So to fill in the proper information that you need to then, when it comes time to make the investment through that crowdfunding site, they constructed the investment agreement properly in the name of the IRA.

Bill Neville (22:47):

Again, standard naming convention, we all may be structured just slightly different, but it’s going to include your custodian name, its going to include your name, and it’s going to include your account number, that’s going to be the naming convention of who’s making that investment.

Bill Neville (23:01):

And then if you’re also investing in your personal name, then that investment’s in your personal name, but on the investment agreement, it has to show different investors. It shows your IRA at whatever dollar amount and percentage, and it shows your personal name of whatever dollar amount and percentage.

Robert Leonard (23:16):

We’ll get into the actual steps of how to open an account, and I’m curious, in this context, how long does it take to open an SDIRA, and then invested into the crowdfunding site? Let’s just say somebody on a crowdfunding site, there’s a company they really want to invest in, their offerings only open for the next couple days, maybe a week, is it something that they could do quick enough to get their money into that investment?

Bill Neville (23:38):

Part of the biggest holdup, but opening the account takes 10 minutes, we have an online portal, that if you go to our online portal to establish the account, its name, address, social security number, date of birth type of account, [inaudible 00:23:49] extend, it depends on how quickly you type.

Bill Neville (23:52):

But it can take you about an account established in 10 minutes, and at the end of the 10 minutes, you now have an account number, which means once you have an account number, you have everything you need to go start establishing the account with the crowdfunding site, you have the information you need to subscribe or tell them you want to subscribe.

Bill Neville (24:08):

The tough part is going to be actually sending the money, because once your account’s established, now you have to fund that account. Most people typically are transferring or rolling over money from their current IRA custodian, or 401(k) custodian.

Bill Neville (24:22):

That part, I mean, I’ve seen that happen as quick as a couple of days, but on average, it typically takes around one to two weeks by the time, whether you go to that custodian and fill out their paperwork, or whether you fill out like… When you do an IRA, an IRA transfer, you fill the transfer form of the custodian who’s receiving the money, and then that custodian sends it over.

Bill Neville (24:41):

So you’re sending money from let’s say Charles Schwab to Entrust, with an IRA which Schwab you’re going to fill out an Entrust transfer form, then there’s a section of the form we have to sign called a letter of acceptance, and then we send it over to Schwab, and then Schwab transfers the money.

Bill Neville (24:54):

We turn around and get the transfer form sent out usually in a day, but once Schwaber, or Fidelity, or whoever has that, it’s now incumbent upon them to process the transfer, and it’s got to sort of work its way up to the top of the pile of their transactions, they have to send in money. And then depending upon whether you request a wire check is going to affect that.

Bill Neville (25:13):

So ultimately, to answer your question, getting the account open is really, really easy and quick. Getting the account funded, can take anywhere from a couple of days to a couple of weeks, right? And so that’s sort of the big issue is, can you set up an account where you can now go, and you can complete the paperwork where you’re committing to the investment?

Bill Neville (25:31):

You can absolutely do that in under an hour, right? You will get your account open, now you go to the crowdfunding site, you set up an account, you tell them the investment that they want to make, you commit to it, 50,000, or 10,000, or whatever you want to invest, then the question is, how quickly do they have to have the money on hand.

Bill Neville (25:49):

And that’s where it becomes a handful of days, or it can be several weeks, depending upon the custodian that they’re transferring, or rolling over the money fund. It depends upon if they submit the paperwork to us properly because the subscription agreement has to come through the custodian for review and signature.

Bill Neville (26:04):

If they take their time in getting that to us, that’s just going to add to the time, do they not complete a property in the name of the IRA, now we have to send it back and get it redone in the name of the IRA. That’s sort of the biggest mistake that people who make investments in private placements make, is that they submit the investment agreement to us in their personal name.

Bill Neville (26:22):

And as we already talked about, it has to be in the name of the IRA. So now we have to send it back to them and say, “No, you need to correct this.” And sometimes they have to go like, if they did it through a crowdfunding site, they have to get the crowdfunding site involved.

Bill Neville (26:33):

So if everything flows perfectly, I mean, we’ve done transactions within a few days, people were like, “I [inaudible 00:26:40] have the money here.” “Okay, but you need to get the money, you need to talk to your current custodian, you need to get the money over to us, you need to get the paperwork, you have to request to have an expedited, which in our case comes with a little bit of a fee.” So we have done that.

Bill Neville (26:54):

But typically, it’s going to take from the time the account opens, to transfer it over to then transact it, on the quick side, on the fast side, it’s still going to be between one to two weeks. But again, committing to the investment is easy, so they need the money within three days, that’s a challenge to get that done.

Robert Leonard (27:14):

A workaround that seemed like it might be possible, but I don’t think it is, is can you invest with non-retirement money, and then transfer that to the SDIRA, and maybe consider that as part of your contribution for the year?

Bill Neville (27:27):

No, you definitely can’t do that. What people have done, and particularly when it comes to real estate, let’s say you want to buy a rental property, and you need to come up with earnest money, you need to throw down $5,000 to hold the property.

Bill Neville (27:38):

And now they’ve got to open an account, they’ve got to drop the contract in the name of the IRA, they have to transfer the money, they have to find the money, and they’re not going to have time to do that, they’re going to lose the property if they don’t get the money.

Bill Neville (27:48):

What people can do is they front the money, and then once the money goes from the IRA and gets paid, then whoever they get the money to, whether it’s an Escrow, or if it’s being held in escrow, then they have to reimburse the account holder that sent the money back to the account holder.

Bill Neville (28:02):

But the scenario that you played out, no, that wouldn’t be allowed. If they are putting up money upfront, in order to hold the investment until the IRA comes up with the money, that investment sponsor, whoever they gave the money to, has to give them the money back, that can’t come from interest, that’s an individual transaction between the two of them.

Bill Neville (28:21):

And even then it’s not a great way to do it. It’s not the best way, but it’s sort of a last-ditch if you really want to make the investments, the only way to hold it, but there has to be an understanding that whoever you gave that money to, the IRA can’t reimburse you. The IRA sends money to you, that’s the distribution, right?

Bill Neville (28:38):

The IRA sends money to the investment sponsor, or to the seller, or to the borrower, or whatever type of transaction. If you fronted money then whoever you gave money to has to give it back to you.

Robert Leonard (28:49):

What I’m taking away from this is that, don’t let your emotions and excitement for an investment take control, and make you rush this. If you want to invest with the SDIRA, get it set up ahead of time, and if you haven’t yet, but there’s an investment you’re interested in, just remember the advice that Buffett gives is, there’s always another opportunity coming. Errors of omission are okay, missing an investment is okay, but don’t let your emotions take hold, and rush you into something.

Bill Neville (29:15):

We do a monthly webinar, a monthly educational webinar, and a couple-few years ago, we decided to do one that was kind of red flags or things to watch out for if you’re making an investment. And so the questions asked [were] things to be careful [about].

Bill Neville (29:27):

And one of the red flags is if they’re telling you, we have to have the money by so many days, or you’re going to lose the investment type thing, that’s one of the red flags, is be careful whenever somebody is saying, “I have to have this money [inaudible 00:29:40].”

Robert Leonard (29:41):

You work for a company that’s been in business for over 40 years, tens of thousands of accounts, billions in billions in investor assets. You mentioned you see equity crowdfunding disbursements, or investments nearly every day or multiple a day, what do you see as the most common, what is the absolute most common investment you’re seeing people use their SDIRAs for?

Bill Neville (30:05):

Well, real estate is probably the most common, although real estate and private placements are kind of neck and neck, and then also, precious metals, those are by [inaudible 00:30:14] the three most popular. But when I talk about real estate, that’s a general term that also includes trust deeds, notes that are secured by real estate, that’s considered a real estate investment, tax liens, they fall under the real estate umbrella.

Bill Neville (30:30):

Plus, there’s also the actual holding of real estate, rental properties, and things like that. On a broader scale, I get a lot of people to tell me they’re investing in real estate, and what they’re actually investing in is a syndication, right? So they’re going to invest in an LLC, and the LLC, like I talked about earlier, the LLC is going to turn around, and buy a rental apartment complex, or something.

Bill Neville (30:49):

That’s not technically a real estate transaction from our standpoint, because they’re not investing in the real estate, they’re holding an LLC, that’s a private placement. So from a standpoint of, we have a lot of investments into LLC, and LPs, that if you were to drill down into what the LLC or the LP is investing in, they’re holding real estate.

Bill Neville (31:08):

And so it’s a syndicator, or maybe it’s a fund that’s doing notes, right? So ultimately, that’s kind of a real estate transaction, on our books it’s considered private placement investments. So it’s tough to differentiate when you say, “Okay, like real estate and private placements are a significant part of a self-directed IRA.”

Bill Neville (31:28):

It’s like the percentage is probably like 80 to 90%, and then a large part of the rest of it is precious metals, right? Cryptocurrency is actually something that’s a growing thing, but private placements, which can be anything from startup companies, to hedge funds, to syndications or privately held funds. Those all fall under the umbrella of a private placement.

Bill Neville (31:49):

Whether real estate of which one is more or the other, is tough to distinguish, but I mean, they both make up, combine those two, and you’re talking about, the majority of our transactions that we do fall under one of those 10, and then again, precious metals become the third.

Robert Leonard (32:06):

When someone is looking for a potential company or custodian for their SDIRA, what are the most important things to look out for? What makes a custodian good versus bad?

Bill Neville (32:17):

That’s a good question. And I think most people are looking at the service that they want to feel that they’re going to get service, right? So if they call, they’re going to get a response, if they send an email, somebody is going to respond, they have questions about paperwork, there’s somebody there to help them.

Bill Neville (32:32):

And then people [inaudible 00:32:33], those are going to be the two things that people are most focused on. I mean, you certainly want to make sure that the company knows what they’re doing. So those are where I have conversations, right? Where people are calling, and they want to understand what it’s all about.

Bill Neville (32:47):

More intelligently we can answer the questions, the more comfortable they’re going to be. People want to be responded to. People are entrusting their retirement accounts to someone, the retirement account funds, and they process the transaction, they want to be kept in the loop, and know what’s going on.

Bill Neville (33:03):

And so that’s going to be the most important thing, is are they responding to you? Are you getting people who are answering your questions, and responding back, and keep you informed of what’s going on. And then I mean, I think people look for ease of use, right?

Bill Neville (33:17):

So, we have a really great online portal that you can use to process your investment, or review your statements or see transactions. And so the ability to do things without necessarily having to talk to somebody can be pretty useful to people whenever you have an online portal, wherein you can be able to access all that stuff.

Robert Leonard (33:36):

Since there’s such a large range of investments that can be made with your Self-directed IRAS, the government has enacted laws and regulations that govern some of the things that can be done with them.

Robert Leonard (33:46):

We’ve talked through some of the assets that you can and can’t invest in, and we briefly touched on the disqualified parties and things like that. Walk us through, in a little bit more detail the most common rules, or laws regarding investing using SDIRAs.

Bill Neville (34:03):

So there’s a section of the Internal Revenue Code, Section 4975 that deals primarily with disqualified persons and privy transactions. So again, to repeat what’s considered disqualified persons for IRA is yourself, your own IRA. So if you have an IRA, you’re disqualified persons IRA, your spouse, your ancestors, your lineal descendants, and spouses of lineal descendants. So parents, grandparents, children, grandchildren, spouse.

Bill Neville (34:26):

So I do sometimes get calls from people who say, “I understand family is disqualified.” And I always qualified saying, “No, not all family. Very specific members of your family.” So what that means, there’s what’s called the self-benefit rule, which essentially says that any investment made by your IRA has to be purely for the benefit of the IRA.

Bill Neville (34:44):

So then you or any other disqualified person can’t receive a direct, or indirect benefit from the investment made by your IRA. It’s kind of tough to qualify an indirect benefit. A lot of the ambiguity in that section of the code, but there are some things that are very black and white. So for example, you can use your IRA to lend money, right?

Bill Neville (35:03):

You can draw up a promissory note, and have your IRA be the bank, and lend money to any non-disqualified third party, so you can have a collateralized by real estate, which is called a trust deed investment, you can have uncollateralized notes, you can do all that.

Bill Neville (35:17):

But you can’t use your IRA to lend money to a disqualified person, you can’t lend yourself, you can’t lend your spouse, you can’t lend your parents, you can’t lend your children, that’s just a primitive transaction. Same thing with real estate. Let’s say you own a rental property, you can’t turn around and sell your rental property that you own to your IRA, because you’re a disqualified person.

Bill Neville (35:36):

Or your parents, you can’t use your IRA to buy your parents a home, because your parents are disqualified persons for your IRA. And again, specifically, when it comes to real estate, a disqualified person can’t use the property for personal use, or do any physical labor on property. So no second home, no vacation home, or anything like that.

Bill Neville (35:55):

Now, when you’re talking about like privately held companies, that’s where it gets, there’s some wording in the code that is definitely up for interpretation that talks about, if you want to use your IRA to invest in let’s say, you are an owner of a company, and you want to use your retirement account to invest back into that company, then if it comes down to it depends upon your role with the company, and how much ownership you have.

Bill Neville (36:16):

So if you’re just a passive owner in a company, right, if you’re a private investor and a privately held company, and you have no role in the company, you’re not involved in running the company or decision-maker, you’re just an investor, then you can actually own up to 50% of that company in your IRA can be an investor.

Bill Neville (36:32):

But if you have an active role in running the company, you’re the CEO, or you’re on the board or something like that, then there’s a place where it talks about you have to be less than 10%, you have to have less than 10% ownership. But even the wording on that can be open to interpretation. So when I tell people about that, I’m usually like, “Look, I encourage you to talk to a CPA, or talk to a tax attorney, have them read again in Section 4975 of the code.”

Bill Neville (36:57):

Because ultimately, whether this is prohibited or not, is incumbent upon you to not complete a primitive transaction, it’s not Entrust’s responsibility to make sure you don’t complete a primitive transaction. Now we can’t knowingly process a primitive transaction, so if you own 100% of the company, and you’re the CEO, and you come in, and you say, “I want to use my IRA to invest back into that.”

Bill Neville (37:15):

Or, if you want to buy rental property from your parents, or from yourself, we would reject it, because it’s an obvious prohibited transaction. But there is some ambiguity around those primitive transaction rules. And again, what’s considered an indirect benefit, right? [inaudible 00:37:29] it says direct or indirect benefits.

Bill Neville (37:31):

But the key is, is that any investment made by your IRA has to be purely for the benefit of the IRA. If you’re investing in a company that you also receive a salary, and somehow your investment is directly tied to your salary, by putting $100,000 in that company, you’ve increased your salary by $5,000 a year, you’re receiving a direct benefit, [inaudible 00:37:51] in the transaction.

Robert Leonard (37:54):

We’re going to talk about Peter Thiel in just a little bit, and this idea of investing in a company that you own is a part of, it’s a great line that he walked and he was part of, so it’s definitely possible. We’ll talk about that in just a little bit.

Robert Leonard (38:07):

But one of the things that I was thinking, and you kind of touched on this, but I still have a little bit of questions or gray area around it is. You mentioned the assets that we can’t invest in, so you gave great examples, wine, right? You can invest in the winery as a business, but you can’t invest in the wine itself.

Robert Leonard (38:25):

Let’s just say we want to invest in a piece of artwork, we can’t do that with SDIRA, so what if we open an LLC, buy the artwork, and then we use our SDIRA to then invest in the LLC, and not the underlying artwork, is that okay, as long as we still stick to all those rules you just mentioned in terms of ownership, and direct benefits, and things like that, are we able to use an LLC to kind of shield those unqualified investments?

Bill Neville (38:53):

If you ask me, “Would I feel comfortable doing that in my IRA?”, my answer would be no. I can’t give you an absolute answer to say it definitely is or definitely isn’t, but I can’t tell you that I wouldn’t do it. I feel like the IRA not being able to invest in collectibles, that extends to the LLC.

Bill Neville (39:11):

But I mean, there are potentially companies out there, who maybe have a business where they’re… I have a friend actually who does restoration on art, right? It’s part of his business is he does restoration, and he ends up with some of his art and resells it.

Bill Neville (39:27):

And he couldn’t invest his own IRA, I’m talking about [inaudible 00:39:30] wanting to raise capital, he went to third parties, and went to IRAs and said, “Okay, I’m raising capital, these IRAs are going to invest with me.” I wouldn’t do with my IRA. That’s the only real way I know to answer that question, is because that isn’t something that you can go to the code and say, “Oh, here that’s covered.”

Bill Neville (39:46):

That specifically says, “[inaudible 00:39:48] isn’t allowed.” I would say that for me that would cross too far in the gray area, it’s words that I guess red or black, white, black that I wouldn’t feel comfortable [with].

Robert Leonard (39:58):

One of the biggest challenges with any sort of business, or real estate transaction is often raising the capital, so if you’re starting a new business, raising capital is often really difficult, or if you’re starting a real estate business, you want to raise money for a deal, a lot of times people will say raising capital is the hardest part.

Robert Leonard (40:15):

Do SDIRA companies have maybe a list of people or a pool of people that have a bunch of money in an SDIRA, they’re interested in investing, and they don’t necessarily have specific investments that they want to make, but they have this money they want to invest in, and maybe people that are looking to raise capital can tap into that list.

Robert Leonard (40:33):

I could see that being super valuable, maybe Entrust has a list of 100 different investors that told you, “Hey, I’m really interested in real estate, I don’t have a specific project, but if you knew people that are looking to raise capital, maybe I’d be interested in hearing them out, and maybe investing in their projects.” Is there any type of relationship there or a type of almost like a job board, I kind of think of it like…

Bill Neville (40:53):

Yeah, I can’t speak to other companies, we created something a couple of few years ago, we call it Entrust Connect. Our account holders over the years have been asking us that type of question for something like that.

Bill Neville (41:04):

And for years and years, we’ve been in business for almost 40 years, and from when I started with the company and prior to that, when anybody would bring that up, our response was always, “Look, we’re just a record keeper and custodian, we’re a neutral third party, if we start doing something like that we’re potentially taking on the role of fiduciary, which would require a certain amount of due diligence being done on, if we’re going to sort of bring investments to you.”

Bill Neville (41:24):

A few years ago, the owner of our company became more amenable to the idea of creating what this platform that we call, which is Entrust Connect, where enables investment sponsors to set up a dashboard, set up a profile, that enables them to further that Entrust Connect platform, they can go, and seek out specifically retirement account investors, or encourage people to use their retirement accounts.

Bill Neville (41:47):

And part of that is that we also created a marketplace of investment opportunities for our existing account holders to review. This marketplace that we have, we have this very detailed disclosure that says, the most important disclosure is these are simply investments, that other interest clients have already invested.

Bill Neville (42:06):

We’ve done no due diligence on these investments, we don’t have any business relationship with these companies, they don’t pay us to be listed on here, we don’t take any kind of commission from them. These are simply investments that other interest clients have already invested in.

Bill Neville (42:21):

So we do have something like that, it’s available only to our existing account holders, so when they log into their account, they can open up Entrust Connect, the first thing that comes up is this fairly detailed disclosure. And it’s a list of investments, they’re mostly like private placement.

Bill Neville (42:37):

So there are syndications, there are funds, there are privately held companies, I don’t think there are any notes specifically, but there are companies that are like funds that are invested in notes. But it’s a list of investments, and we have about 50 on there at this point. And it’s really new for us, really not within the last few years.

Bill Neville (42:55):

And really just starting last year that we really expanded and got a lot more offerings on there. So I can’t speak to other companies, if anybody else is doing that, or has something like that. We [inaudible 00:43:05] a lot of, sort of conversations whether legal and compliance, as far as creating the disclosure that comes up, the indemnification, and everything.

Bill Neville (43:14):

So we have created something like that, it’s a value add that we created for our account holders, because they have been asking us for something like that over the years. “I bought this rental property, and I’m getting rental income coming in. Or, “I had this note pay off, or this private placement paid off, and I opened the account with you for this Express investment, and I don’t want to put it back in the market, so what else can I invest in?”

Bill Neville (43:33):

And our response for years and years was, “Sorry, these are Self-directed, you got to go find the investment itself.” And so we created this marketplace to sort of solve that. They would ask us, “What are your other account holders investing in?”, and my response for many years was, “I’m sorry, that’s just not something we do.” But now we kind of do.

Robert Leonard (43:51):

As someone who is potentially looking at raising money for real estate deals, I would say I’m certainly biased, but I think that that is awesome. I think that’s a great thing.

Robert Leonard (44:01):

And I’m glad you mentioned disclosure because I was going to say, why couldn’t you just add something that says, “Hey, look, we’re just providing this info for you, we didn’t do any due diligence, we’re not recommending any investments, we’re not saying these are good, bad, indifferent, we have no financial incentive here, we’re literally just providing information.”

Robert Leonard (44:17):

And as the owner, it sounds like I decided, I couldn’t really see an issue there. Definitely see how you need the legal piece to be rock solid, but other than that, I think it’s great.

Bill Neville (44:27):

Yeah, I mean, on the marketplace, for example, when you go on the marketplace, and you’ll see the 40 or 50 different offerings that are on there, and then you can click on it, and then it’ll have more detail about the offering, whether it’s Reg A, Reg D, how much they’re looking to raise, what the minimum investment is, who the contact is, and then they can upload marketing documents.

Bill Neville (44:45):

So like the investment sponsors can put a one-page sheet or marketing material. But if they try to put a subscription agreement or an actual purchase agreement, we don’t put it on there, because now there’s a legal aspect to it in terms of how they’re offering an investment as opposed to just linking. We called it Entrust Connect for a reason. We’re just connecting you.

Bill Neville (45:06):

We’re connecting the investment sponsor with the investor, you guys still have to talk to each other, you still need to do your own due diligence, you need to get them to send you the subscription agreement, it’s not going to be available on here. I mean, I’m really glad we did it, but I also understood why we were hesitant about it for a long time, just from a potential exposure, the kind of thing that we could be under, but we just find the heck out of it, right? In terms of what our role is.

Bill Neville (45:32):

The other thing is, we don’t take anything, you’re not paying us to be on there. What we hope is that it’s a value add for our account holders, but we also hope that you as the investment sponsor, if you have other people that are wanting to use their IRA, that we become your preferred provider that you refer people to.

Bill Neville (45:48):

And then we ultimately charge the account holder our fees, we don’t charge that investment sponsor. The investment sponsors are free to pay the fees on behalf of the account holder, but that’s between the account holder and the investor sponsor to work that out.

Robert Leonard (46:01):

I would say that the value being added is worth the potential risk. If we were looking at a scale, I would say that the value is probably outweighing the risk personally, from my perspective.

Bill Neville (46:12):

I can tell you it’s raised about $50 million.

Robert Leonard (46:15):

Yeah, I can see the value, I really do see the value there. When you’re trying to raise the money, what is the process on that end, do you just reach out to Entrust, or how does that work? Because you said you have to be a client to get into Entrust Connect, so what if you’re trying to raise the money?

Bill Neville (46:27):

So you have to establish a profile. So the Entrust Connect has two sides to it, it’s the investment sponsor dashboard, and then the marketplace. And so as the investment sponsor, you have to set up a profile, and an offering. And then you request it to be posted on the marketplace.

Bill Neville (46:43):

And so from our standpoint, once you request it to be posted on the marketplace, then we’re going to come back to you and say, “Okay, you got any interest clients have invested with you?” Or, have you referred anybody that’s going to invest with you?” And then if the answer is yes, then we find out who those account holders are, and if they have account holders that invested, then we put them on the marketplace.

Bill Neville (47:01):

If they haven’t, then we come back and say, “Okay, we can’t put you on there, until you get somebody to invest with their interest account. And if you don’t already know an interest account holder, the dashboard has some ways to help them promote the idea of self-directed IRAS to their existing database.

Bill Neville (47:17):

It’s got the ability to enter in a bunch of email addresses and names, they’ll send out a template email inviting them to open an account. But ultimately, we can’t put them on the marketplace until they’ve got an interested client that [inaudible 00:47:28].

Robert Leonard (47:30):

Almost every financial asset, or strategy, or account, has a group of people that it’s good for, and a group of people it might not be the right fit for. You mentioned before, briefly who it might not be good for, but give us a breakdown of who an SDIRA is good for, and who it might not be right for?

Bill Neville (47:47):

It is good for anybody who is looking at investing in outside the stock-bond mutual fund market, and is also doing the due diligence necessary for that, whether they have an advisor who’s helping them with the due diligence, or they’re doing it themselves. It’s good for anybody who wants to diversify their retirement account, and not just be locked into stocks, bonds, mutual funds.

Bill Neville (48:08):

So I mean, you have an account with a brokerage firm, who you’ve got an advisor or broker, and they’ll talk to you, and they’ll find out your risk tolerance, and your age, and then they’ll say, “Okay, we recommend these three or four or five funds.”

Bill Neville (48:19):

But the likelihood is, is that when the market goes up, all these funds are going to go up, when the market goes down, all those funds are going to go down, maybe at different percentages, but they tend to all move in the same direction.

Bill Neville (48:29):

If you want to diversify away from that, and maybe put it into metals, which tends to be a hedge against the stock market, or you wanted to throw some real estate in, the Self-directed IRA gives you the flexibility to do that, but again, it’s ultimately your responsibility to make sure you’re doing your own due diligence.

Bill Neville (48:44):

When I caution people, I asked who, and to answer your question, who might it not be good for? The majority of the time, the asset that you hold inside a Self-directed IRA is not going to be as liquid as your stocks, and mutual funds are going to be.

Bill Neville (48:58):

So if you are close to retired minimum distribution, if you’re coming up on age 72, you want to be aware of that, that these aren’t necessarily… If you hold real estate, or if you invest in a note, or you’re investing in a private placement, and you’ve come up, and you’re required to take a distribution you don’t have the cash, and some other retirement accounts that meet your requirement distribution, You can take an asset as a distribution, or you can take a percentage of an asset as distribution, it’s not like you can’t take the distribution.

Bill Neville (49:29):

But if you want to take your distribution in cash, you need to find out a way to liquidate. So that’s sort of my biggest caveat, with anybody who’s considering a Self-directed IRA is be aware that, the likelihood is if you’re investing in non-traditional assets, those aren’t going to be as liquid as the traditional stock-bond mutual fund market. And so just again, there are workarounds, just be aware I think is more than anything, it’s be aware of the fact that these aren’t going to be necessarily as liquid.

Bill Neville (49:54):

But again, as far as who they’re for, I mean, they’re for people who want to break out, and diversify their retirement account portfolio away from stocks, bonds and mutual funds, and either have an advisor who’s helping them figure out what to invest in, or doing the due diligence, or they have lawyers who are looking over the paperwork, or they are doing all that legwork themselves. They’re reading the books, and they’re watching the podcasts, and they’re listening to podcasts, and educating themselves.

Robert Leonard (50:20):

What are some of the negative sides of SDIRAs? We’ve talked a lot about the good things, we just talked about some things that are maybe downsides of the investments themselves, that you can make with STI rays, like being liquid, etc. But what are some of the negative sides of the accounts themselves?

Robert Leonard (50:36):

And I think probably the most common if I had to think of one is probably, maybe the fees, so talk to us a little bit too about the fees that are associated with SDIRAs?

Bill Neville (50:44):

Yeah, but I mean, fees with Self-directed IRAS are going to be, in general, are dramatically less than what you’re paying your fund company, or paying that brokerage firm, most of the time if you’re investing in some fund, or multiple funds through a brokerage firm, they’re taking fees, right?

Bill Neville (51:00):

I’ve actually had people say to me, “Oh, I have an account with some [inaudible 00:51:03] brokerage firm, and they’re not charging any fees.” And it’s like, “Yeah, they are, how do you think they’re staying in business?” You just don’t see the fees, because they’re coming out of the back end of the fund.

Bill Neville (51:12):

So like, one year that fund went up let’s say, 8%, well, if they didn’t take out the fees, it may have gone up 10%. But they took their 2%, you just didn’t see it, all you saw was the game. Our fees, we have a flat process fee of $299 a year, if you were to invest, let’s say $100,000, which is not necessarily a ton of money to invest in, [inaudible 00:51:34] looking at real estate, that’s point 0.3%.

Bill Neville (51:37):

I mean, I defy you to find any fund… I know there are no good funds and things like that, but I think most of the time that Self-directed IRAS are fees are dramatically less than what brokerage firms are charging. I really think the biggest downside, the biggest negativity, and I taught I’m not going to repeat myself, is the illiquidity, and the fact that you want to take cash out if you need to access cash fairly quickly.

Bill Neville (51:58):

And your investment in Self-directed IRA, the likelihood is you’re invested in something that’s not tremendously liquid, precious metals being one of the exceptions to that, you can pretty easily sell [inaudible 00:52:08]. But they tend to be pretty illiquid. And then the downside is, is that you’re not going to get any advice from the custodian you have your account with, they’re not going to do any due diligence on the investment.

Bill Neville (52:18):

There’s exposure to fraud, when you’re investing in private stock privately held our funds, I mean, Bernie Madoff took a lot of money from retirement accounts, right? I mean, if you’re investing in something that turns out to be a scam, if you’re staying with publicly traded stocks, bonds, mutual funds, it’s less likely that you’re going to run into a scenario where the company just, an Enron type situation where it was publicly traded and turned out to be some kind of giant scam, where the whole entire company lost all its value, that isn’t common.

Bill Neville (52:49):

In the Self-directed IRA world, I mean, you get fraudsters that are going out and saying that they’re doing certain things, and if you’re not doing your due diligence, and or they’re just that good at committing fraud, people lose money.

Robert Leonard (53:02):

Do you have to have separate accounts for different types of investments, or can you just have one account that can invest in crypto, and real estate, and all these other things, can it all just be in one account?

Bill Neville (53:13):

Sure, yeah, you don’t need to set up multiple accounts. If you have different tax rules, right? So like a traditional has to be in its own account, a Roth has to be in its own account, right? You partner them into the same investment, but other than that, yeah, you can hold as many different types of investments inside your account as you want, you do not require to set up multiple different times.

Robert Leonard (53:32):

So if we have a traditional and a Roth, SDIRA, is it $300 a year for each count, or is it in total?

Bill Neville (53:41):

Yeah, it’s per count. I mean, that’s a fee option, that’s one of two annual fee options that we have, we also have a fee option based on the value that the account. So it could be as low as $199 a year, but yeah, the fee is based on a per-account basis, and so whatever [inaudible 00:53:54] as a transaction fee that we charge.

Bill Neville (53:57):

And we all have different sorts of fee structures, although they tend to be somewhat similar, I think most custodians, Self-directed custodians have an annual fee. Some have higher annual fees with no transaction fees or those transaction fees with lower annual fees, I think that’s kind of where we fall in. But yeah, you’re always going to be whatever custodian you have your account with, each count is going to be subject to its own fees.

Robert Leonard (54:19):

I certainly expected…like I said, I’ve done a little bit of research into SDIRAs before this, I kind of had an expectation of what the fees were going to be, but before I did that research, I expected SDIRAs to be a lot higher than they are, not even just with you guys, just every company in general. I expected you to be thousands, not a couple hundred.

Bill Neville (54:37):

Yeah, no, you’re right, it’s fairly inexpensive, comparatively. I have had people who have said, how do you guys even stay in business? But we don’t have advisors, we’re not paying advisors. We have operations, people who process transactions, and then we have management, we have salespeople.

Bill Neville (54:55):

And with brokerage firms, they have advisors, and those advisors, a lot of them make a good bit of money. And so I think what you’re seeing is a little bit of a [inaudible 00:55:03], sort of a run operation because they don’t have to pay a ton of money, don’t have to go out and get series seven and series 66 licenses, and do all that stuff.

Bill Neville (55:13):

We’re all certified IRA service professionals, CISP is what we have to get, the majority of the company you have to work in the industry for a few years before you can take the test, but that’s different than getting a series seven, where that enables you to [inaudible 00:55:25], and now you can sell securities, and you can sell insurance, and do some of that stuff that I think becomes a little more costly for the firms that are hiring these people.

Robert Leonard (55:36):

All right guys, so that’s where I’m going to cut part one of this two-part series. Be sure to tune in next week for part two, in the next hour of my conversation with Bill Neville, see you guys then.

Outro (55:47):

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