What if a broker doesn't have the expertise you're talking about?
A broker shouldn't act like a member of a labor union and hang out only with other brokers. She must think like a businessperson and hang out with other professionals. Each broker needs to have a team that includes an accountant, a tax attorney, a banker, an insurance agent and a financial planner.
My own father, my "poor Dad," made business decisions on his own, with the pile of bills. The worst investors are those who think they can invest on their own. And that's why they lose.
My "rich Dad" said that investing is a team sport. Once a month, he gathered the best team possible at his restaurant to do an audit on his financial portfolio. There were two or three stockbrokers with different perspectives on the market, his tax attorney, a tax accountant, a corporate accountant, a corporate attorney and his bankers. Sometimes as many as 15 people took part. It was like a football huddle for two or three hours. They all looked forward to it because they got to meet other professionals. And the net result is that all of them got rich because they got information that came from different disciplines.
Tell us about your relationship with your brokers.
I love my brokers. I have six, and three of them -- the ones at PaineWebber, Morgan Stanley Dean Witter and Salomon Smith Barney -- are generally part of my team. We're the Club. They always call me up about deals. But it's private equity stuff. I do most of my stock investing in initial public offering companies, because that's where the money's made. My closest broker is with PaineWebber. He looks at my businesses and positions them to go public. We go over numbers, strategies and audits, and what makes my company attractive.
What makes this broker so special?
We help each other get rich. I can't talk to most brokers about real estate because they're just salesmen. But my PaineWebber broker understands my business inside and out, so he's always looking for ways I can convert earned income into passive income and portfolio income. Recently, he knew I had to move a chunk of money before my corporate tax time, so he helped me find a million-dollar office building in Scottsdale, Ariz., that I bought. By buying real estate, I'm able to take my earned income and put it into another corporation that owns my real estate. That company rents the office to another of my businesses. That way, I convert earned income from one corporate body to passive income in another corporate body. If I had put that earned income into the stock market, my shares would have to appreciate by 30% to earn the same after-tax return I get just by breaking even in real estate.
A broker needs to understand corporate law in order to give the entrepreneur more options. While I may not make as much as someone like Jack Welch of General Electric, I have more control over my money, as do most entrepreneurs. When you're an employee, a W-2er, your single largest expense is your tax. There's not much a broker can sell the employee and self-employed person because the government already took its cut. But if you're selling to a guy who's truly an entrepreneur, there's a lot that you can sell him. I'm constantly trying to move my money before the government gets it. So as a broker, what you're looking for is the rich entrepreneur who has money problems and needs to invest quickly, like I had to at tax time. For instance, where an employee can move only $2,000 into an IRA, the business owner can move unlimited pretax dollars into retirement plans, especially if they're over 50 years old.
Do you do any trading on your own?
I think do-it-yourself trading is stupid. I'm not a day-trader. I pay my broker a lot of money because he's close to the market every day. In real estate, a broker-less transaction is called a "For Sale By Owner." I don't do those because they're a waste of my time. I have only so many brain cells.
What's your outlook for the stock market?
The market is going to crash between 2008 and 2010 because baby boomers will start to retire. Money will move out of the United States, but Asia will start to take off. That's why I'm in Asia through the small businesses I've invested in and through the real estate I lease.
The good news is that U.S. small-cap stocks will take off, but that won't help most people who are counting on their IRAs as nest eggs. Most people are basing the value of their IRA mutual funds on a very inflated stock market. These people may be worth a lot today, but let's see what they have in 2010.
-Tony Chapelle | 
