Zero To A Hundred – Episode 21: Mastering The Pillars Of Asset Protection With Stephen Vettorel

Accelerators! 🚀

Today, we’re diving deep into asset protection with Stephen Vettorel, co-founder of First Down Financial and an award-winning financial advisor. Stephen shares his Five Pillars of Asset Protection framework, covering everything from safeguarding against lawsuits to navigating IRS taxes, stock market risks, and estate planning.

If you’re a business owner or entrepreneur, this episode is packed with crucial insights to secure your financial future!

What’s on the Menu:

🏛️ Lawsuit Protection: How to shield your personal and business assets.

💰 IRS Strategy: Tactics to reduce your biggest guaranteed creditor—taxes.

📈 Stock Market: Techniques for hedging against market downturns.

🏥 Long-Term Care: Planning for future healthcare costs.

🏡 Estate Planning: Avoid probate and ensure a smooth wealth transition.

🔥Why Tune In?

Stephen’s actionable insights provide a roadmap for business owners looking to protect their hard-earned assets and minimize risks. From setting up the right structures to leveraging tax strategies, this episode offers a comprehensive guide to achieving financial security and growth.

💬 Gem from Stephen:

“Protecting your assets is more than just insurance—it’s about building a legacy.”

Get in Touch with Stephen:

📧 Reach out to steve@firstdownfinancialinc.com to learn more about the five pillars of asset protection and building a secure financial future.

Here’s the link to the book: https://firstdownfinancialinc.com/res…

Don’t miss out—hit that subscribe button and let’s take your business from zero to a hundred!💥

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Watch the episode here

Listen to the podcast here

Mastering The Pillars Of Asset Protection With Stephen Vettorel

I am proud to introduce our guest, Steve Vettorel. He is the Cofounder of First Down Financial, a Registered Investment Advisor, and an award-winning Financial Advisor. We’re going to talk about some key topics, which he calls the five pillars of asset protection. Everything from lawsuits to IRS, to the stock market and how to hedge against it, long-term care, and most importantly, estate planning. What happens to your estate? We’re going to talk about it.

BoxFi is the nation’s leading payment consultant providing business growth solutions through payment processing. I’m very excited to share the network I have built over my many years of entrepreneurial career to help you grow your business and become more profitable. Ladies and gentlemen, let’s accelerate together.

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I’m very happy to have Steve Vettorel, the man, the myth, the legend Steve. How are you doing?

I’m doing great. Thank you for having me, Jared.

As a Financial Advisor and a Fiduciary, we’re going to have an interesting interview that’s going to add a ton of value to our audience of business owners and entrepreneurs. The first thing that I want to start with, which is a huge pillar, pun intended, of your business, is your five pillars of asset protection. Let’s talk first about asset protection before we go anywhere else in this conversation.

Five Pillars Of Asset Protection

Probably the biggest question I get, and for everybody in the audience, I would highly encourage you to reach out to me because the longer version of this presentation, which is about an hour long, will absolutely do you justice in this. We’re going to touch a lot on a lot of these topics very basically. I think the deeper dive is going to be a huge value to the audience, especially if you are considering starting a business, a current business owner, a physician, some practicing whatever. A lot of people will ask me, “Why estate planning, Steve? Why does it matter?” The answer is it depends if you’re talking to. If you’re talking to an attorney, asset protection means something completely different than if you’re talking to somebody like myself as a fiduciary, as a Series 65 financial advisor.

Attorneys will tell you, “You need to have trusts in place, protect your assets from liability insurance and all that.” That’s very important. We’ll talk about that. The bottom line of asset protection is there are five distinct components or pillars to it. The importance of each of these components is almost paramount. A lot of them dovetail into each other in how they’re structured.

One thing I try to offer my clients is unbiased advice is that I’m not a CPA, I’m not an attorney. Everything we’re going to talk about, past performances, no indication of the future and all the disclaimer stuff, seek advice from your own counsel. One beautiful thing I think our clients love about us is that even though we don’t practice law, we’re not CPAs, we can tell our clients things because we come from years of experience in this arena.

We can shed the light upon different areas that maybe your other advisors wouldn’t tell you. It’s almost exclusively related to obviously tax savings, long-term care as we’ll go through, the IRS and how we have a big change in tax law coming up at ‘25. We have the mother of all fights because most of these tax law provisions are sunset. Certainly, the areas of asset allocation and the investments in the market as a whole and real estate and obviously the client’s business, but the asset protection component, I could talk for hours on this, but in terms of keeping a very shallow discussion, I would encourage everybody at the end to please read this presentation in its entirety. The individual I work with heavily on, not only this book but the presentation as a whole is the only other advisor I’ve ever come across in this entire country that thinks exactly like I do. I’ve been in beta test to help him develop his assessment software to analyze risk, which is essentially is everything.

#1 Lawsuit Protection

Within that software, do you have the five pillars already built out in that software? Go walk me through the five pillars.

I can always refer to the sheets and we have an extensive PowerPoint that goes with this. We try and send out to everybody if they want it. The first pillar is lawsuit protection. The bottom line of that is it’s negligence. Car accidents. Surprisingly enough, you’re going to do yourself wonders in negligence if you don’t text and drive. Driving is six times in texting is more dangerous than drunk driving. Most people don’t know that. Before I got into this a few years ago, I didn’t even understand. The next thing is premises liability. This is slips and falls, handrails, parties on your property, so forth. This is negligence related to that, that you can be personally be liable for those events.

Looking at professionals. Lawyers, doctors, CPAs, insurance agents, architects, the professional negligence. It’s a big deal in this country. We work with a lot of physicians in our practice here in central Florida that are cardiologists and they obviously have significant potential negligence and they must have malpractice insurance. Taking the steps to protect themselves and their practice, regardless of what the practice may be, is of utmost importance.

A lot of people don’t know this. For instance, lawsuit protection. I can’t tell how many people I come across as clients, they own property outside of their primary residence. A lot of us do. They don’t have the property and a trust. They don’t have the property in an LLC. In many cases, it’s in the name of themselves and their spouse. That blows my mind because God forbid, somebody gets in some situation, any kind of negligence. I always use the example of somebody getting injured at a party or, God forbid, losing their life on your property. They’re going to come after you full bore.

You’re saying that you’re personal. I want to make sure that we’re very clear. Let’s say you’re a business owner and you own a restaurant and you own multiple restaurants, all of your physical locations. If someone were to fall and slip and get hurt and your insurance doesn’t cover enough of that particular situation, that individual who got hurt on your property could sue you and go after your personal real estate.

Depending on how the restaurant’s structured, yes. There are a lot of forensic attorneys who play in this sandbox, so to speak. We’re fortunate enough to have a few of them as clients. It is scary what these guys can find with modern big data. If they do an up digging with normal legal systems of data access we all can have, they could tell if you’re wealthy or not. They could tell if you’re wealthy and certainly the properties and so forth.

A good asset protection specialist to financial advisor will recommend layers of protection in the business or the property or your apartment complex to protect yourself. It doesn’t necessarily mean let’s put it in an LLC. There are different types of structures that need to be set up where even a family limited partnership can own some of these assets outside of an LLC. This is where I have a tendency to go too deep, but for purposes of the discussion, there are multiple ways and you want to find, in my opinion, an unbiased advisor to present all of the different options to you in the pros and cons.

Let’s do this because it’s important what you’re talking about. You and I have had this conversation before and I do have the book, it is number three on my list of books I’m going to read. I got to get through two others first, but I am very excited to read it because I want to learn more. Run down the five so our audience has the five key pillars that they need to be looking out for.

#2 IRS

Five pillars, essentially helping you identify risks that, if unaccounted for, can ruin you financially. Identifying, obviously, the risks is important, but what’s equally important is identifying the potential solutions to protect against them. Pros and cons, so to speak. I already talked about lawsuit protection, obviously.

Pillar two is the IRS, which is your number one guaranteed creditor. Obviously, if many in this country disagree, the taxes are going to be going up while we’re close to $35 trillion of debt. I would disagree. Taking steps to eliminate income, capital gains and estate tax. With a couple of the experts, we work with, which are tops in the industry and respect, there are ways to mitigate risk on property appreciation as well. Also, tax, which is surprising. I’m not talking about a 1031 exchange.

Pillar three is stock market, which we’ll spend a little bit more time on this presentation. Essentially, it’s the byproduct of unchecked investment risk, losing a significant portion of your investible assets and the next stock market crash. You basically taking steps to hedge the downside, which is what we specialize in, asset protection.

Pillar of four, long-term care. Here’s the shocker. Sixty-nine percent of people aged 65 and older will need some form of LTEC. These costs can easily exceed $100,000 year a person must be planned for. The more expensive the state New York, California, the more costly the care is. There are ways to mitigate those costs and you don’t necessarily have to go out and buy an expensive long-term care policy.

I definitely want to make sure we cover that. Go to five. 

That’s flow here. Keep in mind, everybody in this audience, this is a new presentation for us. Remember when Tiger Woods redid his fantastic swing and everybody’s like, “What did you do to your swing?” Pillar five is estate planning. Most estate plans are not set up correctly where they’re incomplete. The other shocker and we work with a lot of attorneys closely here most people that set up a trust, they don’t fund it. It’s like 70%. It’s nuts. It’s a waste of time, a significant expense. Most importantly, you want to avoid probate. That’s one of the biggest takeaways in the estate planning component. I want everybody to clearly understand probate is public and it is costly. Also, taking steps with both legal, medical and financial directives that unnecessarily cost you state taxes.

You actually made a comment, which I think is super interesting, is that the IRS is your first and biggest creditor. Can we talk about some of the strategies that the ultra-high net worth use or implement to either avoid or reduce paying their taxes but they stay compliant with law or tax code?

The key thing is that the IRS, and this is probably one of the few non-arguable things we’ll talk about for here, is they’re number one guaranteed creditors. That’s every single year. Capital gains taxes, estate taxes, obviously taxes on regular income. Essentially, when we’re helping clients save money on both current and future taxes, we’re doing a form of estate and asset protection. It boils down to helping, especially business owners, contribute to retirement plans, save taxes, using those contributions through a myriad of different types of retirement plans. That’s a whole other hour’s presentation, but know the real ways to mitigate or reduce taxes out of it. There’s also those very advanced topics we can go into.

What would you say are two strategies that you implement for some of your high-net-worth clients to reduce those taxes? What are two things you would do for somebody who’s starting to prepare for their taxes in 2025?

Number one would be the Roth conversion. Still viable. It’s still a fantastic way to remove assets from a forced distribution arena. More risk right there. Your risk because you’re paying money, you’re being forced to take assets out of the IRA and this is typically for a client that has, at least for that portion of their wealth of your legacy goal. They don’t necessarily want it. They want to pass it on to charity or their children or whatever. A lot don’t realize is that yes, it is converting and is regular income, but if it’s done in a structured tiered process over a period of time, not only are we helping remove that from your estate because a Roth IRA is never taxed in gains or growth ever, nor are you ever forced to take money out of it.

More importantly, we can actually show you ways to mitigate the income that’s needed when you convert to a Roth IRA. A lot of people are like, “I want to convert $100,000 or $300,000,” whatever the number is, or if it’s $1 million IRA, they may want to convert the whole thing at a five-year tiered structure, “But I don’t want to pay the tax.” There are actually ways that you could be bonused on what you invest in that will help pay for some of those taxes. It’s like a rob Peter to pay Paul, but in the end, you’re converting that asset to a Roth. That is strategy powerful, number one. Number two, if you’re a business owner, there are ways to mitigate taxes due on revenue that the business has depending on the business. Also, protect the business.

A lot of people don’t realize there’s insurance that you could purchase that will protect components of your business against literally 50 different types of loss. One of them being COVID revenue. A lot of people didn’t know there was an actual policy you could have purchased for the business. It’s like key person type insurance for using an indexed universal life, more advanced type of life strategies that would actually protect the business from everything from lawsuits, from bad PR, which is a real relevant thing here in terms of risk these days from lawsuits and going through all the different areas. That’s number two.

The problem, at least, we see is most clients don’t get the correct advice from their CPAs. Many of the cpas are exceptional what they do, but they ride in a very tight lane. They don’t want to go outside the lane. They want to crunch the numbers and do their best for it, but they don’t do a lot of advanced tax planning. We use individuals like Rocky, who wrote the book. We use individuals like Ed as experts to help us guide the client in other areas of tax efficiency related to income and asset capital tax.

There’s something that I want to lean into, which you said is business revenue protection. All of our audience are running businesses that have revenue and they hope that part of that revenue is profit. Otherwise, they would be doing what they do because it’s a passion full and purposeful. Talk to me about how much something like business revenue protection would cost a business owner who’s doing $5 million to $10 million in revenue on an annual basis.

A lot of that is a deep discussion now. It’s going to take a lot longer than we have time for.

Give us the snapshot of like, “This is what a potential range could be,” because the good thing is to be able to be aware of it and wrap your head around it, going into the conversation. It’s less about the intricacies, but it’s like, “It’s going to cost you $5,000 a year, but X, Y, Z will be protected if you have something like this in place.”

The business as a whole would be protected, but the answer to that question is probably about 14 or 15 variables of it depends. I always use the example of somebody owns $400,000 in NVIDIA stock and maybe they put $40,000 into it. They’ve held it for a long time so they have a monster capital gain. That’s why they don’t want to sell it. There’s a strategy out that will allow us to collar that position, essentially owning the options market, puts in calls to protect that underlying stock position, which is highly appreciated. At the same time, you don’t have to sell it. If NVIDIA gets crushed, the options go way to the moon. Even though the stock’s gone down, you have no tax to sell.

It’s like insuring a $100,000 car. Yes, the insurance may cost you $2,000 a year on it, but if the car evaporates in an accident, The insurance is there to cover the car. It’s the same type of concept. Maybe I’ve explained it a little toward, generically related to an automobile or a stock position but you can do the same thing for a business. Not for revenue loss. Just because you’re not aggressive in the marketplace or what have you or a competitive, but it’s loss due to an outside exogenistic event. COVID, lawsuits, somebody that’s trying to poison pill your business where maybe it’s an aggressive acquirer.

It’s almost like a hostile acquisition. There’s insurance of protecting against stuff like that. However, the surprising thing to most of the business owners we meet with, there are all kinds of other strategies that even though the business makes a lot of money, $5 million to $10 million a year, we come across a lot of these clients, there are ways to cut those taxes down the IRSA lot, 20%, maybe 30% off of that and protect the business at the same time. It depends. There’s a myriad of factors and variables that go into that because a lot of people reading this be like, “Alright, great. I got all these strategies.” It totally depends on the business.

#3 Investments (Stock Market)

What’s unique about the position you’re in is you actually have the answers for it depends, which is great for our audience. There’s something else that you mentioned earlier that I think is important. We all understand this. We just don’t know what to do. The stock market truly is unpredictable. If there’s ways in which the audience could hedge against the market, explain for to us what to do so we can protect ourselves.

A little bit of backstory, if I may. We will spend a bit more time on this section. I would encourage everybody reading this, if you’ve learned nothing else, please leave this conversation with this understanding. There is a large amount of financial advisors in this country, and I would encourage everybody on this call of you do ever have or decide to engage the services of an advisor, we’d be happy to talk to you as well. Please make sure you go through a rigorous investigation of these individuals. Check their background and go through everything that they’ve done. Can they demonstrate it?

Most importantly. Do they have downside protection? Now, we have slides 34 through 36 in this particular one, but for the purposes of the discussion, one of the five pillars is protection. If you’re old enough to have been around since you’ve been in the stock market, the chart shows the big declines in both 2000 and the 2007 crash. You can see the circled numbers there of minus 50%. That’s in actually a monthly value number. The daily number is essentially minus 55% at its worst.

When the market crash in ‘07, people ask, “Is the stock market in a creditor?” I said, “The answer is absolutely. It’s a creditor. It’s your goal as an advisor or as an individual managing their own wealth to figure out ways to mitigate the risk.” You hedge that risk to make sure that when there’s large drawdowns in the marketplace, you’re secure in your assets and the risks associated with them are mitigated and potentially even eliminated in some cases. A lot of people are like, “There’s always risk in the stock market.” Yes, there is. Depending on who you use as a planner, you may hear, “Don’t worry, I’m going to take care of your assets. I’m going to put you in a proper mix of stocks and bonds.”

You’ll see in some cases, like in the next slide, and they may show you an asset allocated model a 60-40 and talk about market profile or talk about any modern portfolio theory. How did that help you during the 2000 and 2007 corrections? The portfolio still got clobbered. They’re like, “You were diversified. You had your assets allocated correctly among different areas.”

The problem with that is if you’re in retirement and your portfolio takes a 30% hit, you’re actually drawing income out of it. That’s a problem. You have a chance of running out of money, depending on the size of the portfolio, obviously. That doesn’t strike me as risk mitigation. I don’t want my assets going backward. If you have a 30% loss in any particular, and then that’s a dramatic effect, obviously, the recovery is not 30%. When you’re down 30% in the market, you have to get a 43% return to get back to even. It was important that these large drawdowns in the stock market, especially in retirement years, when you maybe have higher chances of needing a drawing come from the portfolio, are less so it’s essentially avoiding it.

The other thing that people probably will never tell you in any investment meeting, did you know that if you have a number of accounts, and let’s say you have 3 accounts and 1 of them is down and the other 2, maybe they’re flat or they’re up, you don’t ever draw the money from the account that’s down. You always draw from the ones that are either flat or going up in a given year. It seems intuitive. In reality, a lot of people are like, “This account’s down. I’ll just take there.” Number one, never draw money from an account that’s down. You have a significantly higher chance, especially you have 30, 40 years, and in some cases longer of longevity in retirement, when there’s growing income from those assets, it is absolutely critical to gauge the appetite.

Here’s a question because I want to stay on this right now. You said something important in terms of flat or down for the accounts. Is there any point in time where you believe that you should cut bait and run with whatever that stock might be and then reinvest in something else? What will you advise when the market is not doing well?

In the asset allocation, it is imperative and there are very few of us, like myself and Rocky and probably a host of others, we represent about maybe 5% of the financial advisors in the market that actually have a long short strategy for clients. We actually implement. It’s not a lot of trading, but it’s trying to sidestep big downs in the market. In some cases, it may be short if it’s real protracted down. The difference is what you’ll hear and what a lot of people reading will say, “You can’t time the markets.” Arguably, the 7 or 8 billionaires on the Forbes list that are hedge fund guys that didn’t inherit it, they would beg to differ. You panic time in the markets if you know what you’re doing. The difference is you’ll never catch the top and you’ll never catch the bottom.

The most important thing is cutting a swath out of the decline or being on the right side of a lift back out of any bearish period of time. That’s where the cut your teeth and portfolio management is earned, in my opinion. These are the questions you want to have with your advisor. He or she should be able to accurately demonstrate through an entire full market cycle what they would’ve done for their clients and can they demonstrate it? Compare it to this conversation. I hope you read the whole presentation, which we can hook you up with. That is where it’s absolutely going to shake the men and the girls from the boys and the ladies in investing. They’re going to shake themselves out of the weeds because they can’t have a discussion surrounding that.

What happens when the market goes down a lot? The answer is you don’t want to be in it. Have a long-short strategy that can mitigate or to participate. There’s also very surprising maybe to a lot of clients, we’re constantly shocked that many of the advisors they deal with, they don’t present to them some of the risk-free strategies. There’s about six of them out there that have absolutely no risk. You can make money along with the growth of the market, but there’s no downside risk. One of them fixed indexed annuities, which seems like a bad word to some advisors. I find it nutty that you wouldn’t at least show clients because you’re bringing a brand-new asset class into their allocation across their different.

Steve, why wouldn’t he show them an option like that?

If you look at my bio, I used to work for Ken Fisher. He’s one of the biggest proponents against annuities. There are all kinds of material out there that debunks every component he says that’s negative. In the past, pre-2004, if you will, many annuities had fees and they had very little growth. The argument is, “They have high fees with no growth. Their money’s locked up for a period of time.” That’s not the case anymore. Many of them have no fees, a lot of them have as much growth as of the market and there’s no downside risk. You don’t put all your money in any one given investment. Why would it not be a piece of the overall pie of your investment allocation? Rocky goes into the full presentation of this, including the OnPoint software. There’s almost seventeen pages in that book.

We’re going to link the book, which I’m excited to read. We’re also going to link to the presentation because it is a value add for people to listen to that. That was my segue.

Just call me not Rocky. My podcast gone further into his. Actually, it does not. The funny thing is, he runs a firm very similar to us here at First Downs. They contract out with different agents and advisors around the country is we do but we keep that group very small and very specific. To answer your question, past performance is no indication of the future. The last few years, many of the carriers that we’ve connected clients with for a fixed indexed annuity allocation had over 14% returns.

Maybe this is a nascent question, Steve. How is there no risk associated with that?

It’s because the insurance company contractually guarantees the annuity. If you’re investing with a North American or an Allianz, some of the big A-plus carriers out there, we deal with probably 100 of them. We’re a nationwide firm. The key is that, unlike a bank, an insurance company must reserve $1. If you put $1 into an insurance company, by law, they must reserve $1. If you put $1 into JP Morgan as a bank, they’re one of the more conserving well run in this country. Jamie Diamond, we love him. Chase can loan out up to $12 to $17 on that $1. Bear Stearns loaned out $20 to $30 and that’s why they blew up during the financial crisis, or Lehman Brothers. That leverage in banking is much different than the insurance companies. They cannot. If you were to Google bankruptcy insurance companies the last 50 years, the list is small and it has nothing to do with how the portfolio is run or invested. In many cases, it was a failed merger on one of them and some malfeasance a long time ago by another one. There are 17,000 or 18,000 banks went poof in ’08. There were only four insurance companies that went down.

I want to make sure I’m hearing this clearly. An insurance company, if they have taken $1 of an investment, they’re required to have $1 on reserves.

It’s called reserve requirement.

That’s actually huge.

Warren Buffett has how much of Berkshire Hathaway’s in insurance companies? The amount of his wealth. Obviously, he owns two of these insurance companies, I get it, but he has lots of investments in the North Americans of the world and the Allianz. Some of the bigger names out there, there are 7 or 8 in this country that are very well respected. They have very high ratings. We typically only work with A-rated carriers to A-plus. The performance of these products has been stellar.

Here’s the thing. If the stock market is down 20% in a given year, you lose zero in your fixed index annuities. You also don’t make anything that year either but you’re protecting the asset. Since you don’t put all your money in annuities, but outside of that, the stock and bond portfolios that we allocate for clients that whatever advisor they seek out, make sure that they have a long-short risk mitigation strategy for those components of the portfolio.

We use Charles Schwab to custody in our case, but regardless of the brokerage for whoever, make sure these advisors can demonstrate to you accurately. Many of them won’t be able to, and this is where you’re going to trip them up. We have a popular piece that gets downloaded from our website a lot. It’s called the 17 Questions to Ask Your Financial Advisor. The funny thing is, I tell every client, “Turn every one of those questions right around and start asking us, too.”

That’s the point of it. As we’re getting a taste of your expertise, and it’s deep, and I know that you can definitely go even more in depth, which also is awesome because your knowledge base is very deep, I want to touch on something that is very important that our audience, a business owner, an entrepreneur, needs to think long and hard about in their professional and personal lives. They work so hard and whether they’re looking for an exit, they want a family member to take over, they want to multiply or scale the business. Once you get to a certain age in your life, making sure that your needs are met after you’ve served your business for so many years. Talk to me about long-term care and how to properly put that in place and frankly, when you should be putting that in place.

#4 Long-Term Care Costs

The most important thing that probably, and this is a slide we show a lot in all of our presentations. We’re actually doing one in Central Florida in front of a large equestrian society in the middle of the state. For many long-term care expenses to be one of their largest expenses in retirement, obviously, on average, 69% of people ages 65 or older will need some form of LTC. The average daily cost of a private nursing home is $275 bucks a day, or $108,000 annual. This is from a Genworth study. I have all the notes.

I’ll give you something anecdotally. I personally had a very dear friend, who I love and was so happy, pass away in her 70s. She was in my life for many years. Towards the end of her life, we were paying for care and it was $16,000 a month for care. It was literally $4,000 a week for care.

We always say a prayer first on our age and clients here, but it’s important that if there is any Alzheimer’s or dementia, those numbers go up exponential from what I quoted.

Is there like an age where you should start looking at long-term care so you get ahead of it?

Keep in mind that with the average daily cost of an assisted living care, it’s about $54,000 a year. When helping clients protect against LTC costs, we do a form of asset protection utilizing life insurance. It’s much easier. Obviously, this is something to do. People say, “How to better prepare for this?” The answer is get yourself a quality policy. Not a long-term care policy, but get yourself a quality life insurance policy. The earlier the better because you can qualify, obviously, and pass all the medicals. Get that earlier in life versus waiting until you’re 70 and trying to get a standard rating on a policy. That’s one of my biggest piece of advice and the business can pay for the policy as a benefit to the ownership.

I’m not going to get into any of how that works but there are ways that you can deduct those expenses that will pay for that protection. It’s like a key man insurance type of situation. The answer to the question, most people don’t know this, is that a traditional LTC insurance is very expensive. It’s difficult to get underwritten. Obviously if you wait until you’re older, premiums can be increased in future years. There’s what’s called an AB LTC life insurance policy that is a lot more viable. Essentially, it’s designed to pay a portion of the death benefit before death. In some cases, it could pay it out within a 3-to-6-year term, depending on the policy. The underwriting is relaxed. It’s just a phone interview. Unlike traditional LTC policies, an AB LTC policy can have the following attributes.

You can have a return of premium rider such if you need the cash, it’s there and has a sizable death benefit if it’s not used. One even comes with an unlimited death benefit, which is essentially that 3 to 5- and 6-year term because with full term care insurance itself will cost you about $49,000 a month if you’re older right now. It’s pointless. Obviously, with us, and maybe it’s our clientele, our average client, seven figures, so many of them can be self-funded, God forbid, if they have to go into a facility. Many of them who followed our strategies early on now have policies that will help pay for it. It’s not costing them $49,000.

I will say this just because of my experience, even if it was $4,000 or $5,000 a month, which is $1,000 to $1,250 a week. It’s far cheaper than double, triple or quadruple if you want long-term care in home. If you’re going into an assisted living facility, I think that’s a very different story but this is something that people need to key into because it’s important. The healthcare benefits that we have aren’t great. Who knows if Medicaid and Medicare are still going to be around in 20 or 30 years from now. I’m in my 40s now. I’m starting to look at and think about things like this, compounding on things like also disability insurance as a business owner.

#5 Estate Planning

What if something happens? I can’t show up to work. I can’t do what my team needs me to do. The business isn’t going to thrive, it’s not going to grow and we’re all screwed. It’s important that you have these things in place. So far, we’ve covered the lawsuit protection, your IRS is your accreditor. We talked about the stock market. We talked about long-term care. There’s something that’s important that we should talk about that encompasses all of that.

Your fifth pillar is the estate planning. Walk me through, if I’m a business owner, I walk through your door and I say, “Steve, we’re doing $10 million annually in revenue. I am earning 20% of that. I’m bringing home $2 million and I’m in my mid-40s, married, a couple of kids. What should I be looking at in terms of estate planning that are the three key things that I need to do right away if I’ve done absolutely no estate planning?”

The thing I would say is take a long, hard look at every asset you own. What is its value? By the way, we have a cool free service where they’ll give you a rough business evaluation, but based on some good software. If you want to evaluate a basis, you can get in touch with me. It’s done through a particular piece of very specific software through one of our life carriers, Jared. It’s a cool free service we offer.

It’s not going to go into a detailed business evaluation, but it’ll put a number on the business generally based on a whole myriad of factors in the data. Get a valuation of the business, obviously all the valuation of all the assets, what they’re titled in. If you’ve listed everything, we’re going through a deeper presentation, the lights will start to go on.

“The apartment complex is in my wife’s name or mine and my partner’s name. That’s the same partners that own the HVAC company.” There’s a flag right there. Get in touch with us to get some good advice on that. It boils down to past the inventorying the estate planning component is the fifth pillar. I think it is as important as the other four because the key is to get those assets in the right title or the right ownership based on whatever wills, trust, and durable powers. A lot of this can be knocked out.

It doesn’t have to be expensive, by the way. There are a couple of attorneys we deal with that run online where you can get more of a generic plan put together but have something at the very least. Whereas the advanced planning, using a spousal lifetime access trust or a dynasty trust, which is the big one I talked to you about, Jared, that will allow you to 1031 the property in what’s called a dynasty or a Delaware statutory trust. That’s a lot deeper of a discussion, but it’s protecting the wealth that you’ve grown.

A key man policy is another big thing. If you’ve got two partners that run a construction company, equal weights of greatness and what they do, and one’s not with them, what are they going to do with, we had a case like this in Miami of a large concrete construction company. One of the brothers was killed in a car crash. The huge key man policy they bought, paid off the wife and had money to recruit in another expert to fill in. What I find is you can’t fill this guy’s shoes. He was that good at what he did. He built a lot of the high-rise condos in Miami. It took the place of the missing partner and the family didn’t have to force the other partner to sell the business and turns into a big mess. That is probably one of the more powerful stories I have in estate planning. It’s also asset protection as well.

Risk Mitigation With Growth Strategy

Let’s take the concepts that we talked about. We talked about these as the five pillars of asset protection. Asset protection is all about mitigation of risk. How do you as, an advisor and you’re working with a client, balance that risk mitigation but still have a great growth strategy for them in place as well?

That’s one of the proofs in the pudding. I use a lot of F1 references because I’m a big F1 race fan. You’ve got the track. You’ve got your team. You got all the computer system, you got the cars, the edges, the drivers. You have all the experts in the pit crew, and it tastes like a whole plan to put it together. You may have the greatest team on the track, but if you haven’t tested out certain components of the risk bleed, you may wind up crashing in turn one. The key is putting the right amount of percentages into all of these. Not saying you have an even spread because everything’s different for every client. Even though we got 365 clients at the firm, we oversee over $400 million of their wealth, there are many of those clients that have such a specific situation. They have their own portfolio.

All we can do as advisors is to present quality options, introduce our clients to some of our top partners in the fields in this area, and let them make the choice and help them guide the ship. The most important thing is taking action because if you’ve learned nothing from all these stats, there’s an overwhelming percentage of business owners have to have no planning at all. Zero. They put a ton of time into the business and God love you, you’ve done a great job. Love the capitalism and all that goes along. I think it’s fantastic. I would challenge you all to take it to the next step and bring some planning into the next phase.

Incorporating AI

Steve, before we go into our fun rapid-fire question section, Steve doesn’t know these questions, so is they’re going to be new to him, tell me a little bit quickly about how you guys are incorporating AI into your business.

In our particular case, it is saving me time. We use Wealthbox as our CRM. It’s one of the preeminent ones for financial advisory firms. Wealthbox has an integration called Jump AI. You can Google it. It’s pretty slick. Jump AI is actually a note-taker in Zoom or in Microsoft Teams or whatever your particular thing is. This is so good. It could take an entire two-hour Zoom, and I’ve had some of those Zooms with clients before, summarize the whole thing, email the notes to the client and put all the notes from a compliance perspective, FINRA, SEC inside of. That has saved me a bunch of time because as advisors we meet with clients, we’re putting plans together. I’m Portfolio Manager for the firm, so it saves me a lot of time in meetings.

The other thing is that inside of Charles Schwab we have a system that uses AI to go through and know all of the different clients that own Nvidia or Proctor and Gamble or whatever the stock position is. With the click of a button, I can set for particular parameters of a sale related to that position within almost 0.5%-point degree across all accounts. If NVIDIA hits 200, I want a 50% reduction in these three accounts.

Rapid Fire Questions

I’d love to hear that you’re using AI because it’s important for everyone’s business. We use it and it is changing the game for everyone. Steve, we’re going to go into the rapid-fire section. Are you ready?

Let’s do it.

Coffee or tea?

Coffee.

If there were a zombie apocalypse and you had to leave the house, and protect your family, what is the weapon of choice you’re taking with you?

A Daniel’s Defense MM 4V7 AR.

I say yes. I don’t know what the heck that is, but why not?

The Daniels wins all the contracts with the Special Forces. We have two of their big dogs in Washington as clients.

I’m going to come hang with you if there’s a zombie apocalypse.

No, seriously, this thing’s like the BMW M5 ARs.

Is there any book that you would recommend our audience of entrepreneurs and business owners read? It’s mandatory. What would you suggest?

Typically, business owners want to read self-help books on how to be a better person. Honestly, I’m a James Clear fan, Atomic Habits.

One of my favorite books. I did that on my Sunday book review and I had another guest who said the same thing. That was a game-changing book because it helps you get focused and it’s those little tiny habits that add up at the end of the day. That’s a good suggestion. Here’s my next question for you. What is the number one thing in your industry that you disagree with?

Just a fixed asset allocation, like that 60-40. We will obviously have the slides up for everybody to see, but please do not keep a static asset allocation. Regardless of whoever your advisor is, they may be your best friend’s goldfish’s brother and I get it, you got the family connection. Please make sure they’re dynamic with your asset allocation through all full market cycles.

If you’re a business owner, you’re doing $10 million in revenue on an annual basis, and I walk through the door and I hand you a $300,000 check, how would you advise them to invest that $300,000 to double their profits over the next 12 months?

Depending upon who they want to run the money. There are a number of strategies. I’m not necessarily about doubling because the IRS and the SEC and Fed will be chasing me down the street because I’m guaranteeing performance. Past performance, no indication of future. The key is what’s the timeframe for the money? What’s your expectations for growth? If those are solid expectations, if somebody that comes in with that type of stipulation, they don’t have reasonable expectations. I got to have a conversation with them and bring them back down to earth, if you will.

Realistically, the market is probably going to see a pretty big correction. Regardless of who’s running the swamp in DC, the problem is we’re $35 trillion in debt. We are probably going to see a correction in equities. If that, in fact, is the case and they were looking to double it, I’d probably tell them to take some big dogs and maybe 6 or 7 tech stocks.

Buy long-term calls on them after they’ve corrected a bunch. Some will be down 50% in a major correction. If you had done this in ‘02, ‘07, maybe even arguably the latter part of ‘22 or the first quarter when COVID nailed in 2020, you’d done well because a lot of those positions were up over 100%. That means the options would’ve been up 4 or 5-fold over that same period of time.

What is the biggest obstacle that you have had to overcome in your business to build the success that you have now?

It is throwing down the challenge for clients to act. That’s been the biggest. It has nothing to do with us. We could be the best thing since sliced bread, but for clients, it’s not the right timing. I get it. We’re here to help you. We find many people will stick their heads in the sand. If I could get any message out this, get out and take action. It’s like Atomic Habits. James Clear lays out some of the best details I’ve ever come across of taking action. Teeny steps for the goals. The other is Sahil Bloom. If you don’t know who he is, he is a very up-and-coming podcaster. He has a whole segment out there on anti-goals. He uses going down that river rafting trip. You’re trying to get to the sunset of the end of the raft but your buddy’s focused on getting to the end of the river. They’re not focused on the six rocks that get hit. They could flip the boat over in the next turn. If you focus on anti-goals, this is real powerful in investing, by the way. If you focus on Antigo along the way, you have a much better shot at getting to that horizon.

Does Sahil have a book or a podcast?

Sahil has such a fantastic story. You can look him up. He’s a great guy. He was a massive NCAA baseball player who completely blew one of the biggest title games in NCAA history. He never made it in the majors because of it. I’m going to leave it with that.

I’ll make sure that the audience follows up with that. As we wrap, Steve, tell the audience where they can connect with you the easiest.

It’s Steve@FirstDownFinancialInc.com. That would be the best thing to do. Send me an email. I’m ridiculously responsive and, as Jared knows, ridiculously organized. We’re back to them pretty quick.

Steve Vettorel, thank you so much for joining us on the show.

Thank you, Jared. I appreciate everybody’s time.

Important Links

• First Down Financial
• Atomic Habits
• Steve@FirstDownFinancialInc.com
• Wise Retirement

About Stephen Vettorel

Stephen began his award-winning financial planning and wealth management career in 1998, developing and implementing long-term investment strategies for his high-net-worth clients at Fidelity Investments. He currently is the Chief Market Analyst for Auvoria Prime, co-founder and portfolio manager at First Down Financial, Inc a fee only FL registered investment advisor (RIA).

Prior to the merger, Steve was the co-founder, head trader and portfolio manager of Benchmark Wealth Advisors, LLC. He also serves the needs of students interested in learning to trade the futures and forex markets via their sister company FXESTrader. He is a recognized trading expert in technical analysis, Auction Market Theory and has a large following in the financial media.

Stephen also served as an RVP at Fisher Investments and was proud to work alongside famed investor and Forbes columnist Ken Fisher. Stephen later founded of Aumenti Capital Management, LLC, an equity based tactical hedge fund. Accolades he has earned along the way include multiple president circle, chairman’s club, and the coveted 2017 Investopedia Top 100 Advisors award.

He graduated from Xavier University with a degree in Finance and holds the FINRA Series 65 & 66 licenses. Stephen currently resides in Orlando, FL with his wife and two children. As a portfolio manager at FDF I am also a series 65 registered fiduciary. I conduct financial planning meetings and review portfolios to help ensure that retirees and pre-retirees never run out of money.