Speaker 1: 0:00

Welcome to Cut the Tie podcast. Hello, I'm your host, thomas Helfrich. We are on a mission to help you cut the tie to whatever it is holding you back from success, and so today we're going to be joined by Adam Bergman. Adam, how are you? I'm great, how are you doing? I always tell people I'm delicious or tantalizing or some form of a word where they kind of go interesting, so I'm delicious. Today You're in Miami so you could be effervescent. It's a nice one too. Yeah that's actually started?

Speaker 1: 0:32

I would hope so. It's Miami. Take a moment, introduce yourself and what it is you do.

Speaker 2: 0:37

Okay, thanks. So I'm Adam Bergman. I am and the founder of IRA Financial, which is a leading self-directed retirement company. We have over 25,000 accounts, over $4 billion in assets, and I used to be a tax attorney before I found my calling.

Speaker 1: 0:55

I love that because it sounds boring to be a tax attorney. But very well, it's a lucrative business because it's endless work.

Speaker 2: 1:07

Listen, I was a tax lawyer in New York city so it was exciting. I worked on a lot of cool stuff. I worked at really big law firms. The first five years were fun Really. I got to do different stuff, really cool deals. After that it got a little tiresome because it was very repetitive in terms of the same types of deals, same documents. It was very repetitive in terms of the same types of deals, same documents. So it became repetitious and not as exciting. Tell me about the switch.

Speaker 1: 1:31

So when did you switch?

Speaker 2: 1:33

over to. I got lucky Like anything in life. I just had an opportunity. I was an eighth year tax associate and I never heard of a self-record IRA in my life. In fact, I didn't even know that you can do anything other than stocks or mutual funds with your IRA or 401k. So I was asked by a partner I was working with to research whether a hedge fund client or the law firm I was at could use his IRA individual retirement account to invest in a hedge fund. He was the general partner, so I remember thinking this is interesting. Probably not, but let me do some research. At that point, this was 2008. So we actually had libraries within the law firm, believe it or not, and I remember going to the library.

Speaker 1: 2:14

Let me get the Gen Z up. That's a place where there's books and you go there. I've never been there, but anyway.

Speaker 2: 2:20

Exactly and in fact, up until really the mid 2012, 13, like law firms, were allocating whole, entire floors to library and you can imagine, you know, the cost of square footage in New York city for, literally, books. So anyways, I found a book on retirement accounts and I was blown away and in fact the tax code was very clear that, yes, you can do alternative assets with your retirement account or IRA or 401k. So, literally, I remember the next day I started doing some research about what the industry was, who the players are, how it works, and then, within I don't know three or four months, I quit my law firm job and took me about a year to kind of raise the money, start IRA financial and get my feet off the ground and then we're off to the races and it's been. The last 15 years have been super fun because I get to do what I love.

Speaker 1: 3:11

So I think we were talking. You're my age 49. So mid-30s, that's a bold move. Usually people have to get laid off a couple of times before they go make that move. So good for you. What was in your own journey of success? What's been the kind of biggest metaphorical eye you've had to cut to find it?

Speaker 2: 3:29

So I think I got some of the best advice I got out of a friend whose dad was a very successful software entrepreneur, and I remember the last couple of years being a lawyer. I just wasn't feeling it. I was trying to find what my next move was going to be. Do I find another law firm? Do I try to find a business I want to do? And I just didn't know what I wanted to do. I just didn't understand and really know what the future would life. So the best advice I ever got was hey, adam, you got to do something where you have the expertise and passion.

Speaker 2: 3:58

And if you, you know tax law you've been a tax lawyer for eight years. You have a master's in tax law. Know tax law You've been a tax lawyer for eight years. You have a master's in tax law. You know tax law better than most people, most lawyers. Why don't you try to find something associated with tax law?

Speaker 2: 4:09

And to use the analogy, it's like if you want to go and start a chair business, there's a hundred people that know more about chairs and you have no pedigree. You're going to always be catching up, but with tax law, you're going to automatically start at the top. You're going to have the pedigree, you're going to have the trust from the consumer. So you need to find a business that's centered and focused around tax law, and I always kept that in the back of my head and that's when I found this self-directed industry and this idea and that's kind of what got me running with it. So that was probably the high of my journey from lawyer to entrepreneur is just realizing okay, this is what I like, this is what I'm good at, and I need to find a business in this area because otherwise I'm going to be climbing up a pretty steep hill, yeah.

Speaker 1: 4:53

So how do you define success then?

Speaker 2: 4:57

For me this is cliche, but it's true. It's not just dollars and cents, it's for me. I wake up every morning and I'm super passionate and I want to keep running and going and pushing, and pushing, and pushing. So I love what I do. Um, when I'm on vacation, I'm working. Right to me, Working is fun, believe it or not. Like, uh, yeah, I want to go to the beach and I want to ski and do all the great stuff.

Speaker 2: 5:21

But, like I'm always thinking about my business, I'm always thinking how can I help people say better, say more, make it easier, more exciting to save for your retirement using a retirement account. So that success is I want to build the biggest and best retirement company because I want to essentially totally disrupt the industry where you can eventually hopefully soon on one platform, be able to buy stocks, real estate, eventually, hopefully soon on one platform, be able to buy stocks, real estate, cryptos, every type of legal asset in an IRA on one platform, in one place, without having to have IRAs in different types of institutions. So until I get there, I'm going to keep pushing and that's my story of success. When I get there, I'll be successful.

Speaker 1: 6:01

Yeah Well, you'll be back on the show when you are successful but different. I will tell you in my own journey here, as you learn about business and start new companies. I've learned about Robs, which is RBS, and I'm sure you're familiar with it and if I'll say what I know about it, effectively, you could take a qualifying 401k. So when it's not, you know it's in a, let's say, a pre-tax, whatever managed by JP Morgulans or something, it doesn't matter, it's yours. You can move it to actually go create a management company and leverage it to build a business, fund it and do it. So I mean, is this one of the alternatives you work with as well and explain it better than I do, because I'm still learning about it, but I'm like well, that really opens up the door for buying real estate or for doing other stuff, right, I mean, he showed a book. So for those listening here, I wrote a book.

Speaker 2: 6:50

I wrote the first book. It's called Turning Retirement Funds into Startup Dreams. It's on the ROBS. So I'm one of the few companies in the country that specialize in ROBS. We've helped thousands of people. It's one of the products we work with. And, yeah, it's one of the products we work with. And, yeah, it's a really, really great structure. It works. If you are looking to start a business, um, and you want to use your retirement funds, you're going to own more than 50% of the business and you want to be involved in it and have your retirement account own it. So when you sell it, the money goes back to your retirement account, tax free. The Rob's all over business startup solution is a great, great, great solution, um, something that I've been working with for 15 plus years. I mean I was going to put that in perspective for people.

Speaker 1: 7:29

So let's say you have a half a million in your retirement account and you move it a hundred percent of that over to a company that's whatever it is. Maybe you're going to go buy real estate and that's what you whatever, whatever the legal reason is. That's one of them I believe you can do from a management company. As long as it's a legitimate business, you can pay yourself out of that as a member of the business. So if you needed money to pay yourself, you're paying yourself on an investment that if you lose it, it's a lost investment, not a penalty from a retirement account. You spend every dollar of it. You just lost the investment. That's a fair way to look at it where you could truly leverage it. Act free or you'll pay your income tax as she comes in, but the point being is you risk it. You get more value out of it than taking it. You want to make money with it.

Speaker 2: 8:17

You're 100% right. I remember first learning about it like 20 years ago, and I remember talking to a colleague and we both were like seems too good to be true. The IRS came out with a memorandum on this in 2008, basically saying, yes, legal, but you need to comply with certain requirements. But essentially, yeah, it takes advantage of an exception in the tax code that allows a 401k to buy qualified employer securities or corporate stock. That's why it doesn't work in a self-directed IRA. The self-directed IRA cannot invest in an entity controlled 50% or more by such persons, right? So in the case of a ROBS, you're using a C-Corp and a 401k, which allows you to circumvent the prohibitive transaction rules that attack IRAs and allow you to do some really cool stuff like invest in yourself, earn a salary and sell for an agency tax Buy. Do some really cool stuff like invest in yourself, earn a salary and sell brand GV's tax, buy a franchise Absolutely.

Speaker 1: 9:09

And I love the idea is, if you actually make money and then at some point you know you exit the business, you don't even have to sell it, it just returns back to the custody of the piece. So it's a brilliant thing that allows you to build wealth and say, hey, I'm going to sell this. I don't know how you exit. We'll take that offline maybe. But the point being is you could build wealth, use it to make moves and have a retirement that's waiting for you that goes back in tax-free and you're just into it so you can live along the way. So I had no idea about it a year ago. I'm like holy cow, that's powerful, that's cool. Yeah, I didn't read your book, so I'll take with you offline a bit about how you did that in the setup 10 years.

Speaker 2: 9:48

Wow, yeah, 10 years, 2015. I gotta update it actually, but the core the core is is still accurate. Maybe the the some of the tax rates are a little bit off, but, um, yeah, you can do it. It's a really cool structure see your, your, your thought.

Speaker 1: 10:02

If you guys had a thought right there, that was the sound of a thought going on it. It's like you should call him All right. So, hey, listen along the way. I want to come back to something In your journey you've had. But what was the actual like? This is one challenge I had to overcome, like everyone has them in any business, like it could be, you know, I had family members in the business. I had to stop doing this. I had to quit drinking. It could be anything we always want to know from you. What was the one thing you really had to start doing or stop doing? That was getting in your way for success.

Speaker 2: 10:32

Yeah. So it's very important. If I ever got to teach an entrepreneurial class, this is what I focus on and it's basically you have to be loyal to your business and not your friends and people that you grew attached to in the business. So my business started very, very small with one account and I started in a like a WeWork right and it was basically me and my wife and now we have a hundred plus employees and unfortunately I'm a loyal person and as the company grew and got more sophisticated, I knew in the bottom of my heart that some of these people just didn't have the skill set necessary to kind of keep scaling the business and growing and growing, and growing.

Speaker 2: 11:16

But I really liked them and I stay attached to them and unfortunately I ended up doing myself a disservice, the business a disservice and them a disservice, because I was putting them in a role they couldn't succeed in. So ultimately I ended up having to kind of part ways with them and if I did it at the right time when we kind of probably both knew it was time, they would have been able to find probably a more suitable job and a longer career path instead of having to get through a messy separation and making it kind of hard for both of us and actually impacting the company, because there were some technology issues we were having because the tech people that I was loyal to just weren't able to handle some of the sophistication of the company as it grew.

Speaker 1: 12:01

It's a listen. And I I'm going through this right now where I personally I made a bad business decision because of my personal attachment, affiliation with my team of trying to make it secure for them when the model you know, at some point we were so busy that it made sense to pay one flat fee and then, as we decreased or just changed our services, it didn't make sense and I didn't do anything about it for six months. And I'm recently going through it now where I'm like, hey, we got to go back to a different model and it doing about it for six months. And I'm recently going through it now where I'm like, hey, we got to go back to a different model and it impacts people and your heart's in the right place, but it's. And then there's a coach I have that he's like every business goes through this. He's like just be happy that it wasn't family.

Speaker 2: 12:38

Yeah, so you got to cut the tongue. I mean, you're actually doing a disservice to you and the person. Cut the tie when you know, trust your gut. The person cut the tie when you know trust your gut, you know it's not right.

Speaker 1: 12:51

You just see that the skill set's not there, they're not as confident. Yeah, for you it was. For me it was more of just a business. Yeah, but it comes down to like you know, you're letting a person. This is the. This is the lesson to take away. I think right is it? And I usually ask you this, but I'm gonna say the lesson you can agree or disagree is is that you really have to discloud your personal judgment. It is not a family, it is a sports team maybe a better analogy for a team and it's like you have to make the moves to win and everyone's got to be on the same page for that. But that's a really hard lesson and it's something you're not going to catch till too late, probably, but everyone's going to go through it typically.

Speaker 2: 13:26

I understand, I was like yeah, exactly the skillset necessary for a business with a million dollars of revenue versus $20 million of revenue is very different, and my idea was that, hey, if I like you, you're smart, you can figure it out. Um, but not everyone could figure it out.

Speaker 1: 13:44

Right, yeah, I mean, it's a different evolution. You need a different CEO at a million than you do at 20 million and different at 200. And, knowing your own limitations, Like for me, I'm like I want to exit when the company's got a valuation of 10 to 20. Why? Because I get bored when operations get going. I'm like I want to go build something new. It's also where your skill set is. So same thing goes with employees as well. You have people who can do everything but can't do one thing really really well. They're great early. Later on, you use some people that are just really focused on what they can do well. So what are you most grateful for?

Speaker 2: 14:52

Oh, probably, I would say it's kind of cliche, but like my wife my wife basically because she helped me start this business and without her I don't know if I would have quit law. To be honest, I was a little bit scared because I was making good money, kind of had the golden handcuffs. I was in a New York City you know eighth year associate. I was making good money and I could have potentially made partner and had a nice career in law. But she kept saying this is your passion, you love law, but it's not your calling, go for it.

Speaker 2: 15:25

And at that point I was in my early 30s, I had no kids. So she's like listen, this is our chance. Let's take a year, two years. We have savings, we'll downsize, let's start the business. Worst comes to worst, it fails. You can always go get a law firm job. But she supported me. I'm not sure everyone in that case would support the fact that I was going to go from a few hundred thousand dollars a year to potentially zero. Really, for the first year and a half I didn't take any salary. So we definitely had to cut back on our expenses and weren't able to go out every weekend and do the stuff we were accustomed to living in New York City, so it was a big, I think, a sacrifice, but she got me through it. So I'm totally grateful to her for getting me through, getting me here and helped me start the business those who may be listening.

Speaker 1: 16:19

You're going from like a 10, 11 or more state tax bracket to zero. Yeah, you get you other ways, but that's by your choice. And then now you're like you don't have to make nearly as much and going out, there's choice. It's just different and you're like and it's warm, so, um, it's amazing social financial engineering by moving that's amazing.

Speaker 2: 16:33

Yeah, I actually. I actually was in new york when I moved. We only moved kind of as the company was starting, but one of the that's amazing finale the more inexpensive part of Florida. I think my half is more expensive than New York City now, honestly. They're like I don't mind $4,000 a month Exactly, but it did save me $25,000, $30,000 a year, which was money I was able to put into the business.

Speaker 1: 17:10

Exactly, and so I think sometimes, you know, I always kind of find these reflective moments. But if you can find these kind of ways of let's try something new, you get one life. You've always said I've always wanted to live here or live there, and it's 30, 40% less and you can at the same time downsize or right size yourself to what it is you're trying to do for two to five years. Don't be afraid of that. The sting of status goes away pretty quick, quickly. I'm sure that was part of what you had to deal with is the sting of big city attorney. You're like no, I'm not fat like there's there's a, there's a, there's a. You know family and friends and the circles around you definitely judge when you make those moves. So nothing.

Speaker 2: 17:50

Listen the. The one thing I'll say to your listeners is nothing worthwhile is easy, and when you start a business, expect 10 years. Expect that you're going to work your butt off for 10 years. It's rare. It's impossible to sell your business within two years, three years, four years. That doesn't happen unless you've developed some AI platform. It's 10 years. You're going to work your butt off, but it'll be worth it. If you find your passion. It's going to be hard and fun and great. 10 years.

Speaker 1: 18:22

I think that the scenario where you can do it in three is where you've solved a problem, you've exited and you're in a position, because you're exit, to solve that problem again slightly differently or for a different market, and you're just going to go build the exact same business and go resell to the same people that just bought your other one and they love it. Like, go do the hard work, yep, great, we'll take that one too. And like, literally that's where it happens, because you focused in on something you know you can do well and I want to leave people with something before we kind of get in this last section. Here you said something very important you focused on where you have passion, some potential, which are skills, and it had a real problem to solve. And you need all three of those to have a successful business, because if any one of those is small, you'll burn out. You won't be able to compete because you won't be good at it or there's not enough people there to make money from.

Speaker 1: 19:10

And it's really important to have all three of those. Specifically, if you're just starting, because you're going to be able to do it, you need the passion, because that's the fuel for 10 years and your skills are the engine and then after that you know, the problem pays for it. So yeah, that's super important, and if you don't have those, look someplace else. Shift, shift. Now say that way yeah, I'll.

Speaker 2: 19:30

I can give you a quick analogy. I remember I was in law school and a couple of my buddies. We were looking this is like thecom bubble and we're looking to be like a legal document type company. I remember we were doing the numbers and we're looking at how many documents we'd have to sell to make a few hundred thousand dollars a year each. And it was such a huge number that we said it's just the market's not big enough. At this point it's not worth our effort. That we said it's just the market's not big enough. At this point it's not worth our effort. We can be lawyers and make the same amount of money with no risk. So I agree with you you have to look at the market because if the market's not big enough, don't waste your time. Go find another business to do. You don't want to be spending all this time for making less than you could just having a nine to five job. It's not worth it.

Speaker 1: 20:14

Where that works is side hustle. So you have a very niche small market you can serve with almost no effort. Do it Because you can. You can flow in, even if it's like a couple thousand a month. 3000 a month, you know that's that's mortgage money, right. And if you can spend hours a month to do that, it's that way. Keep your W-2, keep your insurance. Do all that and build a side hustle. Instead of watching Netflix, go work on it for an hour every night. I mean like that's it.

Speaker 2: 20:39

I agree, but don't quit your job for a business that the max you're going to be able to do is less than what you're making. Nine to five, it doesn't make sense. Take that risk.

Speaker 1: 20:50

The reward needs to satisfy the risk. Extending that a great measure of success is if you can replace your W-2 income. You're killing it, Absolutely killing it. And if it took you four years of college, four years of law school or three years of law school and let's say 10 years as a lawyer, to get to $350,000 a year, don't expect, in three years you're going to return $350,000. In three years you're going to return it $350,000. So just know that it's going to take that same probably amount of time to get to a mastery level and a business level and a profitability level to figure that stuff out. But just know that if you're making $100 a year, you get out and start making $80,000, $90,000, or $100 a year. You're killing it. No one's laying you off except you at that point. So it's hard. I could do a whole podcast on that and probably a series which I think I have. Yeah, uh, rapid fire, just just kind of winding in here. Who gives you inspiration oh, that's good.

Speaker 1: 21:44

Probably steve jobs peter theale yeah, two, two awesome ones to go do it. I mean the. What gives you most like me a one-liner? What's the? What's the? What's the hook into them?

Speaker 2: 21:55

Well, steve Jobs just the fact is his attention to detail and creativity. And Peter Thiel he's got a $5 billion Roth IRA, so he was able to use the Roth IRA in a way to invest in PayPal, facebook and Palantir all tax-free. So he'll generate $5 billion plus in tax-free wealth because he was able to use a Roth IRA versus personal money. So he's my hero.

Speaker 1: 22:18

I mean, he is the use case for what you're trying to show people. You can be done, and that's what I was like. I don't normally do a follow-up on that, but I thought that might be important. You know we want to promote people here. By the way, I think you've already shared kind of the best business advice you've received a bit, but I do want to know kind of what your must read book is. What would you recommend?

Speaker 2: 22:39

Oh, I, the Steve jobs book. There's a. There's a Steve jobs book that Walter Isaacson wrote, and I just finished, several months ago, the Walter Isaacson book on Elon Musk, which I thought was amazing. Whatever you think of Elon Musk politically or not, it doesn't matter, read that book because you can see how much this guy cares and how much he's looking to disrupt processes. So, for example, if a process takes 10 steps, he's going to want to see how it can be done in three steps, and this guy will sleep on the factory floor, if he has to, to focus on each detail in the process to make sure he can help his team. So it was very, very interesting. It's, to me, a must read.

Speaker 1: 23:22

I hadn't heard that one, so I will definitely put that on one of the list of things I need to go do. If you had to start over today, when would you go back in time? At what point in your life? And?

Speaker 2: 23:31

what would you do differently? So if I had to go back in time, I'd probably go back to 2020 or so, right around when the pandemic was starting and we saw a huge uptick in business because we were one of the first companies to have a crypto platform for retirement accounts, and I would have brought in way more talented people. The biggest mistake I made in my business as a first-time CEO I didn't understand the importance of talent. I just kind of thought that, hey, I kind of know this stuff, so I'll just surround myself with people I like and people that are smart and we'll figure it out together Right, and like a basketball analogy, like I'll be LeBron James, I'll get some shooters around me, so if I'm in trouble double team, I'll pitch it off to them. They'll hit the corner three it's going to be great. Didn't work out the way it should have, because I need. I should have had better talent, so pay for talent. So pay for talent. If you have excess profit, dump it back in your business pay for talent, talent, talent, talent.

Speaker 1: 24:25

People matter, yep, and hold them accountable. I think set it up in a way that you you take, you know, be slower to hire, but really fast to get rid of people who are clearly turds, or just interview well, get rid of them fast because it's going to kill you, like now you have, like it's like a basketball analogy. It's like having somebody on the other team that's shooting the wrong basket.

Speaker 2: 24:47

You're like dude yeah, that's a cancer and you know it. The problem is we all know it, right? You, you know you. I've hired thousands of people over the years. Like you, can tell right away when someone's good and then the the people that aren't so good. You just give them the benefit of the doubt because no one likes to separate from anyone, but it's the best for both parties.

Speaker 1: 25:06

It is. If there's one question I should ask today and I didn't, what should have I asked you and how would you?

Speaker 2: 25:12

answer it, I guess if your listeners were interested just the tax benefits, like why someone should use a retirement account to invest. And I would say there's two main reasons right. Number one if you use a pre-tax retirement account, you get a tax deduction, which is great. And then the second benefit is your money grows tax-free in a retirement account, so something called compounded returns, with Albert Einstein coined. The eighth wonder of the world that's how smart people get rich is your money grows faster when it's not subject to taxation Rule 72, if you assume a 9% rate of return, every eight years your money doubles.

Speaker 2: 25:51

So people need to understand the power of compounded returns and the power of the US retirement system. And the last thing I'll say it's literally rigged in our favor. It's the only area where you have bipartisan support between Democrats and Republicans. Why? Because it works. So if you're going to save, if you take anything away from this, open an IRA, save. If you have access to a 401k and you're getting a match from your employer, put as much in as you can. It is the best and smartest way to save.

Speaker 1: 26:15

Yeah, I mean, it's like the entry point for sure, and I love what Elon Musk did say. He's like hey, listen, taxes are just social engineering at scale. They are there only to serve you to do something or not do something. So we want you to buy homes, we give you tax deduction, we want people to get tied into working corporate and do this while you have this, and this is one of those functions that serves very wealthy people as well, and so that's why it exists. That's why everyone agrees like, oh, that helps us, and so, as long as it makes money for everyone, it will exist, and it's going to for some time. So, if anything, it will improve because more wealth will come and people will be like, hey, you need to engineer 2% more out of this. They'll find a way. And that's really the social engineering that makes all this stuff work, is it benefits?

Speaker 2: 27:06

every wealthy person who makes a decision Fair enough, exactly, yeah, how do you get ahold of you? Shameless plug time for you. Yeah, I know you can check out our YouTube channel at IRA Financial or website IRAfinancialcom. Tons of great content on various topics on retirement accounts, self-directed IRAs, 401ks, robs and how you can potentially shelter your income gains from the investment tax rate.

Speaker 1: 27:27

You know I never asked this question. I think it might be a fun one to ask you. What would you title this YouTube channel? Our YouTube episode.

Speaker 2: 27:34

Oh, great, great question, because we talked about entrepreneurship and also retirement accounts. So I don't know. I think you can go both ways. I'm not that creative, I'm just a lawyer. I'm never creative enough. That's what I got out of law school.

Speaker 1: 27:49

I can't answer that legally. No, I would tell you answers. Ask AI. So that's what we're going to do. Yeah, okay, that's true, adam. Thank you so much for joining me. You rock, oh sure, thank you so much. Yeah, listen, adam. I mean listen. You maybe just listened to him for the first time. He's a big deal. You need to check out what he does. He's one of the OGs in the game in this, so go check out his YouTube. It'll be in the show notes. Get out there. Go cut a tie to something holding you back.