Most people talk more about living debt free and not having credit cards, and all those crazy conversations, when you need to be focusing in the other direction, making more money, investing more money. Wanting to be accredited, wanting to be a private bank, and wanting wealth management.
So, what is wealth management? Usually it is people a million, two million, five million. There’re companies who won’t take you as a private bank and banker, and has signed you on, until you’re probably in the ten, even 25 million, so the range is quite high, but a million is usually your starting point.
To be accredited means that you are making 200,000 dollars or more for two years in a row, or you as a couple, are making 350,000 thousand, or you’re a millionaire. So, accreditation is usually a first goal that we help you set on your way to becoming a millionaire, because you got to make 200,000 dollars. So, let’s get there first, and then at least you can start investing in all the alternatives. There is nothing that’s off the radar that you can’t invest in once you’re accredited, and then set a next target to be in wealth management, which means private banking.
So, private banking is something that’s offered by banks and financial services companies, and it’s for mostly people that are in their millions or more. You get assigned a private banker, and, as long as they’re there and you’re there, you get to stay.
Let’s talk about online banks, because a lot of you, you love the automation of all the online banks. The challenge of having a private banker, at least for me, is usually an eye-to-eye conversation. It’s somebody that really knows your goals, knows your financial goals, and they actually know the rules of the bank.
How does banking work? Banking works on your deposits and, how they make money is what’s called an arbitrage. So, let’s just say we’re going to get your company up to a hundred thousand dollars, when you put that hundred thousand in the bank, gross revenues, not net, you give the bank permission now to go grab a million bucks and give it out in consumer loans. These loans can range, because the interest rates are rising anywhere between 8, 9, 12, I’ve even seen 15 percent for some people, who have worse credit. So, you’re going to spend a lot of money, but that’s how banks make money on the arbitrage of your deposits.
Every time you make a deposit, you’re in partnership with that bank. It’s not a one-way relationship, and I think a lot of you realize that you could, as you grow into your private banking and wealth management, reduce your fees for the banking side. Now, they might make it up on alternative investing side later. But on the bank side, your fees go down. You get consolidation. You get a private banker. You get different lines to go in, there’s a lot of reasons why you want to do it, and it’s much more private. Meaning your companies stay private, your trust stays private. You, as an individual, stay private.
As you start tracking the money that you make, the money your company deposits, you can do a lot of these beginning moves. If you don’t even know how to be aware of these conversations, you won’t ever walk into them. So, awareness is a big part of your journey towards being a millionaire, and then entering wealth management and private banking.
A few other things that are a little more holistic for you beginners to do that aren’t a millionaire, are just fresh millionaires, you got to get that company making money. You need to be an LLC, an S Corp, a C Corp, limited partnership, and you have to have a trust. If you aren’t organized organizationally and corporately, I mean most of the bank and financial institutions aren’t going to look at you anyway. They’re going to know you are super immature, that you don’t even know the basics about tax code. Because at LLC, although those entities allow you 81,000 pages of tax code, so you can start earning your way in.
So, you have your own personal account, now you have your first LLC, and then maybe you open a C Corp, and then maybe you buy real estate, and open another one. Now, you have four lines of credit. You’re putting money in the system. You’re putting in deposits. You’re being able to use credit. Your credit scores are going up. Your access to money is going up.
Once you’re in private banking, and you start growing these LLCs, you’re going to have multiple corporations, multiple bank accounts, multiple investing accounts, the privacy is worth it. The privacy of having somebody holistically looking and just being another set of eyes. That, with the proper CPA, proper legal team, proper mentoring team, you’re going to go fast. When I promised three to five years in my Millionaire Maker book, it’s a true thing.
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