This Company Says It Can Help You Take Control Of Your Retirement

Benzinga

Tony Unkel, Business Development Manager of The Entrust Group, was recently a guest on Benzinga.  Entrust provides account administration services for self-directed retirement and tax-advantaged plans. The company allows for the purchasing of alternative investments with retirement funds and administers the buying and selling of assets that are typically unavailable through banks and brokerage firms.

Transcript

00:00 Tony, how are you doing today? Welcome to Benzinga Live.

00:03 I'm doing well. Thank you very much for having me.

00:05 Of course, of course. So before we get started, you want to just give us a brief

00:10 overview of the Entrust Group, what it is you guys do, what you allow your customers to do?

00:15 Absolutely. For over 40 years, the Entrust Group has allowed our investors to take charge of their

00:21 retirement accounts by providing access to tax-advantaged, self-directed accounts.

00:27 Our services allow investors to invest in alternative assets that are not typically

00:31 available through traditional banks and brokerage firms, making it possible to

00:36 completely diversify your portfolios. We are not just another self-directed administrator.

00:41 We like to say that we are the originator, being in business over 40 years, having over

00:45 25,000 active clients and custodying a little over $5 billion in assets under administration.

00:51 Got it. So let's talk about the self-directed IRA real quick.

00:56 What are the differences between a self-directed IRA? And I guess, what are the similarities

01:03 between a self-directed IRA and one that you might have that's managed?

01:07 Sure. So the IRAs are going to be the same. It's going to be a traditional IRA or a Roth IRA,

01:11 SEP, simple IRA. We also offer HSAs and ESAs. So on the surface, the accounts are exactly the same,

01:18 follows all the same IRS rules and regulations, contribution limits are all the same.

01:23 What differentiates them is the assets that are held. Your typical IRAs at your typical brokerage

01:29 firms are invested in the market, stock bonds, mutual funds. Self-directed IRAs allow you to

01:34 diversify outside the market into the alternative space, whether that's real estate, precious metals,

01:40 hedge funds, startup companies. It really gives you a broader choice of investments to put your

01:48 money into. Some risky, some safer, but you are in charge of all your own investments and you're

01:53 outside of the market. Got it. So why, I guess, what would be

01:58 the advantage for a retail trader or just like normal guy investor like myself to go with a

02:05 self-directed route as opposed to go into some big bank and saying, "Hey, manage this money for me."

02:11 Sure. Obviously, you're not paying the management fee. You're going to pay somebody to manage that

02:15 money for you. Self-directed IRAs are typically geared outside of the market. So retail investors,

02:22 day traders, probably not the best fit for you. But as you grow your current retirement account

02:27 and you want to get out of the market where you want to put some capital into real estate, you can

02:31 go out and buy a rental property where you're managing that type of asset that gives you that

02:35 nice return. Yeah. And I've seen a graph. I'll try to pull it up real quick. I've seen graphs

02:42 and charts before that show you like over 30 years. Here's what your retirement account would

02:47 look like with those management fees taken out and what they would look like without those

02:51 management fees taken out. Here, actually, I got one. I'll pull this one up real quick.

02:56 While I'm doing that, Tony, can we talk about at least some of the potential risks involved

03:03 with a self-directed IRA? Absolutely. For me, the most important part and responsibility of

03:09 the account holder or the self-directed IRA is doing your due diligence. Whereas your traditional

03:15 or your normal IRAs where you do have that manager doing it, they're picking the assets for you,

03:19 in a self-directed IRA, that is your responsibility. When it's your responsibility and

03:25 people have access to a significant amount of money, there's always the possibility for fraud.

03:32 So you really have to do your due diligence on whether you're lending somebody money,

03:37 you're buying metals, you're investing into some type of real estate syndication.

03:40 Really do your deep due diligence and make sure that the investment you are making is safe.

03:45 If it sounds too good to be true, it's probably too good to be true. So outside of the fraud and

03:51 the due diligence aspect, another risk is some of these assets are risky. If you're investing

03:57 in a startup company and it goes belly up, there's no recouping your investment. On the other hand,

04:03 if it takes off and the company goes public and you're in there as an early seed investor,

04:07 you're going to make a lot of money for your retirement. Doing your due diligence,

04:11 investing in what you know would be the safest ways to move forward.

04:14 Another downside is lack of liquidity. So you're not buying and selling private assets,

04:19 you can't day trade private assets. So some of them have three to five year more hold period.

04:24 So if you need access to your capital and you're in the alternative space,

04:27 liquidity could be an issue. - Yeah. And I mean, at this whole,

04:32 getting, I guess, the availability to even touch some of these alternative assets is a newer thing,

04:38 whether you're talking about companies raising through reg A or stuff like this. So I want to

04:43 get a little bit more into that, but I did find this chart real quick. So I'm just going to pull

04:46 it up. This is just on a article from USA Today. So investing $10,000 a year in a retirement plan

04:53 that averages 7% returns over 30 years is great. But investing with a 2% fee instead of a 0.5% fee

05:00 can cost your plan 220,000. So this is actually all with fees. Some fees are just a lot lower,

05:06 this green bar right here that shows that you'd have around 920,000 where my cursor is,

05:12 that's with a half percent fee. This number down here is with a 2% fee. I don't know,

05:18 Tony, you're more in the business than I do. I don't even know. What do you think the average or

05:22 normal fee is for a managed retirement account? - I guess it all depends on the advisor using the

05:29 brokerage firm you're using. Are they fee-based? Are they asset-based? Do they set their own fees

05:34 for you? I know we can talk about our fees. Of course, we charge fees. It's not going to be as

05:38 high as this. Some self-directed companies do do an asset-based fee and some do a value-based fee.

05:45 For us, we think we're right in the middle of the pack when it comes to our fees where we do charge

05:51 per asset held with a little about 15 basis point of charge on certain dollar amounts.

05:57 It's not going to break the bank for your fees though. - Got it. I've just always thought that's

06:02 interesting because I've talked to a lot of people who will show me their portfolios or

06:11 their retirement account and they're looking for advice or whatever, and they'll say, "Look,

06:14 I'm paying X amount in fees. The account's growing this much, but it's not even growing as much as it

06:21 would have been if I was just investing in S&P 500." I say, "Okay, then why don't you do that?"

06:25 And then you're not paying a fee. But then some people like having that peace of mind that there's

06:29 someone in between them and their money that someone-- So it's really anyone listening out

06:34 there, it's really what you feel the most comfortable with, like I said at the top of the

06:38 show. If you're like me though, I do want to have that more hands-on approach. I want to have

06:43 more of a say and the final say of where my money's going to. But let's break into some of these

06:52 alternative asset opportunities that you have when you do go the self-directed route that you

06:58 don't have at maybe if you go to your local wealth manager, they're probably just going to put you in

07:03 a bunch of equities and bonds. What are some of the alternative assets that go in with a company

07:10 like Entrust Group or going with a self-directed IRA? What do you have access to? Sure. Pretty

07:15 much everything. So the list is infinite on what you can invest in and what you can do with your

07:20 money. Most popular ones, real estate, whether that's a syndication, physical real estate,

07:25 rental properties, commercial properties, land, undeveloped land, all those are allowed. Precious

07:31 metals, limited partnerships. So what you can do is pretty much infinite. It's easier to discuss

07:38 on what you're not allowed to do. And the IRS prohibits certain investments within a self-directed

07:42 IRA. One of those being an S corporation. The other collectibles, liquor, artwork, and coins.

07:50 You can invest with something that you currently own. You can invest with your family,

07:56 lineal descendants, parents, grandparents, children, grandchildren. And you can invest

08:01 in life insurance policies. When I want to touch on the collectibles, you can invest in liquor,

08:05 artwork, and coins. So you can't hold a bottle of Screaming Eagle in your IRA, but you can invest in

08:11 a vineyard. You can't hold a painting, but you can invest in the business behind the art gallery.

08:16 So your options really are infinite. So what, I guess, have been the most popular

08:21 alternative assets that you've seen people dipping into from their self-directed?

08:27 Hands down, real estate. Definitely the most popular. Majority of folks are in real estate.

08:33 Past few years, the private equity field has been growing. Crowdfunding has been growing.

08:38 Let's say past year or so, we've seen a huge jump in the precious metals space.

08:42 So it all depends on the market, what the market's doing. And people want to recover

08:47 what they've lost. Real estate has always been a pretty stable investment, whether that's retirement

08:51 money or personal money. So if you can direct that into a Roth IRA and not pay any taxes on

08:55 those gains, it makes sense for a lot of investors. What about just the overall, in terms of

09:02 deposits into people's self-directed IRAs? I imagine a few years ago during COVID, when the

09:08 markets were going crazy, everyone got their stimulus checks. I'm sure there was a lot of money

09:12 flowing in. Has that started to come back after it slowed down? Has it always been the same?

09:18 I mean, what's it looking like? Sure. So there's three ways to fund a IRA,

09:22 whether that's a normal IRA or self-directed IRA. And that's via contribution, which the IRS

09:27 sets your limits annually. It's a rollover, taking money from an old 401(k) plan from a prior

09:32 employer, rolling that to the IRA. There's no dollar limit on that. We're doing transfers from

09:37 your current brokerage IRA into your self-directed IRA. So yes, post-COVID, I think our rollovers,

09:44 we saw a lot more of them. Unfortunately, a lot of people lost their jobs during COVID,

09:48 and they tapped into those retirement plans, went into a self-directed IRA and put their

09:53 capital to work for them. So dollar amounts are pretty much the same. I haven't seen a big jump

09:58 or a big decrease over the past couple of years. Got it. And then why Entrust, Tony? I mean,

10:08 I'm sure there's lots of other places now. I know you said you guys are the originator, but

10:12 there are other places I'm sure that people can go set up their self-directed IRAs. Why go with

10:17 Entrust? Absolutely. I think there's about 42 custodians out there in the country that do what

10:23 we do. I'm confident to say that over half of them have modeled themselves on our business.

10:28 Entrust is the originator. We're in our 41st year of business. We have recently voted the greatest

10:36 online. We're the best online portal for investors. Our selling point is we provide you one

10:41 single point of contact as well. No call centers, no 800 numbers. You're going to get a designated

10:47 person based on your geographical location, and that person is going to be there with you from

10:51 day one until the time you retire and close your account. Now, we're not there to give you

10:56 investment advice, tax advice, or any types of personal advice. We're there to educate and assist

11:00 you with setting up the account, completing the proper paperwork for the investments,

11:05 and guiding you along that process. Well, there you go, Tony. It's been great to have you on

11:11 Benzing Alive. Is there anything else you'd like to touch on while I got you? I appreciate the

11:16 invite. Thank you very much for having me.

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