Jim Brubaker: Investing after you sell

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Welcome to the Exit Coach Radio show, the show for baby boomer business owners who are looking for cutting edge information as they plan their 3 to 10 year business succession and exit. Every week we interview top professional advisors for their best tips, strategies, and precautions so you can be well. And don't miss our one minute exit coach tip of the day on Exitcoachradio.com. And now here's your host, the exit coach Bill Black. So I'm here at the BEI conference in Denver and I am talking with Jim Brubaker who's with Exit Retirement Strategies in Denver, Colorado, and Jim's been a longtime member of this group, and he's one of the first people to get the certified exit planning designation. Jim, welcome to the show. Thanks, Bill. So Jim, Yeah, in Denver, uh, you know, you've, you've been working and living in Denver most of your life in Denver and the Nebraska area. And so you've seen a lot of trends happen and a lot of things happening, but as the baby boomers now reach these, uh, milestone birthday ages, what's on their mind out there? I think they're re-looking at their life and their business and what they really want to do after their business or or change in their business. They may want to keep working or they may want to get out. I think what we've seen lately still want to be tuned into something. Yeah, it's racing cars or it's working in construction business, pursuing passions and activities, maybe even volunteering in some of those, but, but not just sitting around the house or not playing golf or skiing. I mean that stuff is fun, but that that's not really a purposeful life after retirement, right? Right. Many of my friends are golfers, and it's but the line is I play golf. I don't want to play more golf when I retire. I do something else and And and I'm seeing more, not as much sale of businesses, we're seeing more people who want to actually help some of their key employees move forward with the business. Well, that's, that's a key point, and that is a lot of people think of exit planning and they think, well, when I'm ready to sell my business, but a lot of owners, probably a good majority of them, will actually want to transition it to a next generation, and that takes preparation time because the next, the next person who's going to Take over the business may not be management ready at this point, right? Correct. And it's a business continuation, I guess we call it as opposed to an exit. Many of the people, maybe they're a field person in the construction industry and they're great at it, but they're not accounting based and they have to put a new team together to keep that business going. The business owner will tend to It's like a project for them to help keep their business going. And then on the flip side, there are some that say, you know, I've tried that, the team isn't built, it's more effort than I want. I'm going to sell and start a new, like you said, passion. It could be a business, it could be a hobby, it could be volunteer. Jim, I have a question for you because I know you have a fantastic wealth management practice here in the Denver area and you do a lot of that work for business owners who have Who've been able to sell their business and now all of a sudden they're liquid. They have a lot of money and they're saying now what do I do, Jim? I know how to manage this wealth when it was inside the business, but what strategies are available, you know, what can I do to create income from that. Not risk it and lose it all. So what kind of platforms do you guys look at or how does the process start in evaluating what to use? Well, it's partly the same as the exit planning process with BEI, what do you have and what do you need or want, and most of the business owners, I don't think, have been really goal oriented. It's more keeping their business going. So the goal is more what do I want, what do I need for income, and then building a plan, a wealth management plan, and monitoring it to make sure they get there. And these days, of course, the banks know where, you know, they're not very popular unless you just have some short term needs and you want to park some money there for a while, but in this very low yield environment, what are some of the types of instruments that generally that people are turning to to produce income with their, with their liquidity with their new assets? You know, it's hopefully they've had a large enough check that they do not have to have a really high yield because it's hard to project even a 4% yield anymore is difficult if you're not willing to take risk, and after a person's sold their business, they tend to take a little less risk with their investments that they're not used to working with every day. They risk in their business, but not in their investments, um. It's difficult to provide a really completely safe CD type income. If someone says that's possible, it's probably not, but I think a diversified portfolio, managed money of various things. If it's long term income, maybe annuities, people use some alternative investments. Many of the business owners own their own buildings. You know, we hear that term a lot these days, alternative investments, and I don't think a lot of our listeners are really aware what. Some of those categories mean. I mean, we understand stocks, we understand bonds, we understand mutual funds or combinations of those. Annuities provide lifetime income and they're a great tool, at least a partial tool to get people to have that, you know, that replacement pension plan kind of feeling, that money in the mailbox that they love. But what are some of the alternative investment structures that are out there and, um, you know, what, what's inside of those? The ones you hear about the most are the real estate investment trusts or real estate investments. An alternative investment again could be the owner's building that they retain and rent to the business or rent out. They could have their own little real estate investment, but the partnerships people buy are real estate based and they could be industry-based or, you know, a warehouse or they could be warehouse-based or could be. Apartments or hotels. So most of it, a lot of it's real estates are, but then others are oil and gas or bank loans or on and on in various longer term investments, you know, 5 to 10. Yeah, some of these things that are creative uh arrangements where a big investment company found a niche to fill where the banks left some of the, uh, their customers high and dry, so they created. Kind of bank substitute types of funds and things like that that they're, they're producing a nice yield. Um, but you know, it's, it's really one of those things where if your investment, um, and wealth manager isn't talking about all of the spectrum of these different types of investments, you're need to question that these days because just eking out the the mutual fund yield, you know, with a combination of 60% stocks and 40% bonds or something along those lines is kind of old school, isn't it? It is, and the old buy and hold and not review. is scary. It might work, but there's a good chance it. Well these days and in this changing environment, how often do you think people should sit down and review their investment holdings and their asset allocations with their professional? I mean the least would be once a year, but as a person's portfolio is larger or as they're nearing or in retirement, you know, probably 2 to 4 times depending on how detailed they want to work at, at least a couple of times. So keeping in close touch is really important because of the changes. The nature of the investment platforms that are out there. There's the technology is changing a lot of that. It's the platform as well as their own goals change. They may think they know what they want to do after they retire from their business, but that'll probably change too. That's a great point. Now, when you map out somebody's retirement plan, are there different stages like the first stage where they want to make up for lost time and travel a lot might be more expensive, and then they get tired of that and then move into the kind of the stay at home and play with the grandkids kind of phase? You know, they talk about that, but it seems to be that most people really are looking for something right away, you know, maybe they'll go on a trip because they promised they'd go on a trip for a month or something or maybe they'll rent a house in Scottsdale and reward kind of thing, right? Yeah, but really in their mind they're they're not there. So is their current lifestyle a good indication of what their future lifestyle if they travel a lot now and enjoy that? Is it fair to assume that they'll probably want to continue that? I sure they may be, they may do that extra weeklong trip, you know, add a little on or maybe they'll they're on a cruise, they're going to run a suite instead of a room. So you look at some of these formulas that say, well, you're going to need 70. of your income or whatever, it might be more like they need 100% of their income for at least a few years until maybe they get tired of that and slow down a little bit. I fully agree. Um, it's, it depends on where their money is coming. Much of their money may not come in for a while. You know, they may defer Social Security, they may Not have a pension. I fully agree. Good point. And then when somebody sells their business these days, they will likely get paid in some kind of installment. We all like to think that they're going to get the giant check like Phil Mickelson gets at the end of the golf tournament, but a lot of times it's going to be a series of smaller checks, and the further those are out, the more risk there is that they won't, they'll be late or they won't show up at all, right? True. And I'm sure our M&A people here at the meeting with. Have some better thoughts on that. I know we had one client to sell and they had 90% cash up front, which that's the highest I've heard for a long time. Yeah, well, that, that is a lot. I mean, that's unusual, I think, out there, but there's a lot of money out there. So the bottom line is what we're talking about is there's, you need to explore your options, keep on top of things, and work with people like Jim Brubaker here who come to conferences like this to sharpen the saw, to learn new techniques and keep on top of trends. And, uh, Jim, thanks for joining us today and how can our listeners get in touch with you? Well, we're in Denver 70-876-2323. if you have questions. Will you talk to anybody that calls in and just give them a little bit a little bit of free time to kind of check in with what's going on? Yeah, we can help out. And you have a team of specialists as well that specialize in other areas. So if they have questions about any of this exit plan. Or investment planning or how to create income or even just the whole creating the retirement roadmap and picture and protecting it all, you can, you can pretty much handle them or put them in the right direction. We use a combination of people in our office as well as backstage firms like BEI to provide expertise. Great. Well thanks, Jim. Thanks. I've been talking with Jim Brubaker of Exon Retirement Strategies. We're going to take a short break and we'll be right back. You're listening to Exit Coachradio.com, the information station for age 50 plus business owners, where we're interviewing over 250 top advisors for their best tips, ideas, and precautions so you can be well planned. We upload new one minute tips every day. Exitcoachradio.com. Come listen for a minute. Thank you for listening to Exit Coach Radio. Hey friend, I know how this feels. Waking up exhausted after multiple trips to the bathroom and feeling embarrassed by sudden leaks. I used to be constantly on edge, searching for a restroom whenever I was out. Then I discovered better woman. I was skeptical at first, but two months in, everything changed. I experienced improved bladder control. No more heart-stopping moments when I laugh or sneeze. Less urged to go, deeper and more restful sleep. I finally felt like myself again, confident and in control. Better Woman is natural, effective, clinically tested, and trusted by women for over 25 years. Ready to take back your control? Head over to Bebetternow.com to order your supply today. That's Bebetternow.com. These statements have not been evaluated by the FDA. This product is not intended to diagnose, treat, cure, or prevent any disease. Users directed individual results may vary.