Article

You Can't Do That... Can You?

Written by Richard Parker

Topic: Financial FreedomPublished July 15, 2008

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Last month at a party, I was telling a friend about a real estate investment I found on eBay and how I financed that purchase inside my IRA. Suddenly, I felt like I was in an old E.F. Hutton TV Commercial. You remember the spots, with the punch line "Well my broker is EF Hutton and he says…" while the entire room stands frozen in place, leaning forward as far as possible to hear the hot stock tip, as the announcer states "When E.F. Hutton talks, people listen." In this information age called the 21st Century, information can become a two-edged sword. Information is good, even powerful, but too much leaves us confused, like a deer in headlights. In this and future Space Coast Business articles, I’ll bring you usable bits of powerful information that you can turn into money. The most widely known, yet least understood retirement vehicle is, arguably, the IRA. Most Americans are aware of only a fraction of the power IRAs hold. Ask most bankers or brokers how much you can borrow in your IRA, or how to set-up a checking account for your IRA, and they’ll look at you as though you are from another planet. But, both can be done, simply and quickly. Many financial institutions use the term self-directed when describing your IRA investment choices. What’s not told to you is that, when working with them, you can only choose between a few investment categories such as stocks, bonds, and mutual funds – the ones they are in business to promote. But what about the rest of the investment universe? We all know it’s possible to achieve solid and safe returns, when investing in real estate, funding mortgages, or buying tax certificates – don’t we? You must simply establish, in advance, the IRA structure that allows seamless movement among stocks, real estate, bonds, mortgages, mutual funds, and tax certificates. This is done, in part, by placing your retirement funds with a true self-directed custodian, a trust company that holds your IRA assets. It’s just that simple. Choose a custodian who gives you nthe control of your own retirement assets. One that allows you to take advantage of what your broker has preached for years, diversification and asset allocation. To the financial industry, this has come to mean that you can diversify but only within what we sell. But, as we know from experience, all investment categories cycle in and out of favor. So, if you want your IRA to take advantage of, say, a real estate boom, you cannot afford to be locked into only stocks or mutual funds. But, remember, when real estate peaks, you must have the ability to seamlessly move at least some of your money back to securities. It is not one particular investment, but seamless movement you want.nnnnnLet’s not forget how leverage can help enhance your returns. We see the effect of leverage when buying a home. We buy a $300,000 home and put $60,000 down (20%). The home’s value, over time, increases to $400,000. What’s our return? Is it 33%, since the house increased 1/3 in value ($100K/$300K)? No – you only invested $60,000 to achieve a $100,000 profit. That’s a 167% return, and that’s leverage! So, why not employ the same type of leverage in your IRA! The IRS allows leverage, and leverage can help increase your returns. If you are not allowed to leverage your IRA investments its usually because of the internal rules of your custodian. Simply put, your brokerage firm or bank has established a business model to block you from investing your money in anything that they don’t sell and the custodian enforces their rules. You may ask why you haven’t heard about this before. The San Francisco Chronicle said it best on January 26, 2003: “The reason you haven’t heard about them [these investment alternatives] is that there is little profit incentive for financial institutions, which primarily sell stocks and bonds to IRA accounts.” The more you learn about self-directing your retirement funds, the more it may become apparent that you not only have the wrong IRA custodian, but also are receiving the wrong investment advice. Choose carefully – after all, no one cares more about your retirement funds then you do. See you next month. n

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About the Author

Ask anyone who knows him and you’ll quickly realize that Richard
Parker was destined for success. His first business venture found him to be the youngest licensed broker in the history of the Lakeland Real Estate Board in 1976. He has been continuously licensed as a real estate broker for 30 years.

During these early years, Richard also joined the United States Jaycees, serving as a state officer for Florida. Not only was he named "Outstanding Jaycee in America," but he won 1st place nationally in the organization’s formal speaking competition, ‘Speak-Up.’ These Jaycee experiences formed a solid foundation upon which Richard was invited to speak at the Positive Thinking Rallies, where he shared the stage with Zig Zigler, Art Linkletter and Dr. Norman Vincent Peal.

In 1986, Richard turned his focus to the financial services industry. First, he joined one of the nation’s largest Wall St. firms, Dean Witter Reynolds (now Morgan Stanley). His initial success enabled him to then become the branch manager of Anchor National Financial Services, the predecessor to AIG SunAmerica, where he quickly became their second highest producer nationally. Always one to seek out the next challenge, Richard, a million-dollar producer, formed his own NASD member broker-dealer Summit Brokerage Services in 1994, and quickly grew the firm to 68 offices and almost 400 financial advisors. In 1998, Richard took the company public. In 2002, he sold controlling interest in the company, and in 2003 he retired from the financial services industry.

A decade of diverse financial experience has propelled Richard into a successful career as a top financial industry speaker, trainer, author and coach. He is currently the President and CEO of Educational Seminars of America (ESA), a leading provider of proven practice-building solutions for financial professionals. Richard has since founded Advanced Retirement Marketing Services (ARMS), a facilitation and marketing firm focused in the field of self-directed retirement planning. This firm helps individuals and companies establish self-directed

IRAs, SEPs, SIMPLEs and 401(k)s. It also helps companies in the real estate, banking, lending and financial services industries to market their services using these self-directed plans. ARMS is wholly owned by ESA.

Richard is a member of the National Speakers Association and serves as a state board member of the Central Florida chapter. Richard’s speaking schedule regularly takes him all across America and around the world: From local area church groups to regional broker meetings, from vendor sales events to national conferences, and from corporate keynotes to international engagements. Always motivational, always humorous, and always a hit with his audience, Richard’s expertise covers the wide range of financial industry topics.

To date, Richard has authored two uniquely successful national seminar systems, and four books. The seminars include Bible-Based Money Management, taught in churches, and Family Wealth Strategies, a public-corporate seminar taught in colleges, universities and corporations. Both systems enable financial professionals to reach and teach prospects, while they become known as a top financial expert in their community.

During the past two decades, Richard has trained over two thousand advisors throughout the country, teaching them the tips, tools and techniques to cost-effectively turn their financial services business into “The Perfect Practice”.

Richard’s writing includes three industry books: The Perfect Practice, a study guide for advisors, Lifetime Financial Strategies to help America’s families better manage their money, The Sales Process, an advisor’s guide to prospect conversion. For the investing public his study course, The Journey to Wealth has given investors from across the country financial direction. He also authored Cuba – The Story of Revival, written to raise money to build churches across Cuba in memory of his late grandso
Josh. In the recreational industry, where Richard speaks on a regular basis, he has authored Retire and Stay Retired – Enjoying the RV Lifestyle a best seller in the RV community. But by far, the book he has enjoyed writing the most is The Tunnel of Time, a children’s book, which he co-authored with his 12-year-old granddaughter, Brittney.

Richard attributes his success to his willingness to “get right down in the trenches” and to learn the lessons life has to teach. According to Richard, ”Over the years, I’ve made and learned from every mistake in the book, so I can help others to learn nwhat to do, and not do, for mere pennies on the mistake dollar”.

A fifth generatio
Floridian, Richard and wife, Joan have two married sons, Wayne and his wife, Melissa, parents of McKenna, and Shane and his wife, Gale, parents of Brittney and Beau. He resides in Melbourne Beach Florida.

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