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The Real Time to Build a Family Office Is When You Think You Don't Need One | Ali Katz · The Great Wealth Transfer

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  The time to build your family office isn't when you're rich. It's not when you're a Decca Center
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  millionaire or a billionaire. The time to start to build your own family office is actually when you
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  think you don't need one. I see a lot of people who are raising money way too soon, and they're
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  just gonna lose it. They're gonna lose all of the money that they're raising because they don't
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  have the systems and structures to hold it. After I had built $2 million businesses, I had lost
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  probably close to $1 million at that point already. I'd gone into debt selling my business to
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  the wrong person. On the other side of all of that, I decided I was bad at business and I should just
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  walk away from everything. Because I started at a big law firm. I didn't think that any of the legal,
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  insurance, financial and tax parts of business applied to me. I thought that was for rich people
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  and I wasn't rich. I was just me. I had my own business and I was sure that I didn't need legal
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  agreements. I was like, no, if I'm doing business with people that I trust, I don't need legal
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  agreements. That's just a way for lawyers to make money. And I was a lawyer and I was saying that,
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  and that's what I thought. And I got sold the wrong kind of insurance when I had just started
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  out. I was naturally very skeptical of insurance after that because I'd been paying for insurance
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  that wasn't the right type, but basically I'd gotten sold insurance, and I didn't even know what
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  financial systems were. I didn't know what books were, and I didn't know how to find out what books
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  were. And I had gone to my CPA and I had said, hey, I think I'm supposed to be looking at some
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  reports. And she said, well, it depends what you want to know, but I didn't know what I wanted to
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  know. Then the first year that I made $1 million in my business, I had an unexpected $116,000 tax
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  bill, and I didn't have the money to pay it because I hadn't been planning for that kind of
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  taxes. And it turns out that had I been planning, I could have paid a $50,000 tax bill instead of
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  $116,000 tax bill, but I didn't know the right questions to ask and all of that, because I
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  didn't think that any of that applied to me. I started my career working on tax transactions for
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  Warren Buffett at Charlie Munger law firm, and that all made a lot of sense for the wealthiest
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  families. But I didn't think that it applied to me. And as a result of me not thinking that it
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  applied to me, it ended up costing me over $1 million. I never even would have imagined, really,
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  that I would have $1 million to lose. But it turns out if you're going to build $1 million business,
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  it's very easy to lose millions of dollars along the way when you just don't think that this
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  applies to you at all. And I didn't think it applied to me. I didn't feel rich, and I think that
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  was really the source of why I was making poor decisions when it came to my legal, insurance,
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  financial and tax matters. I didn't think that I needed to take care of my legal, insurance,
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  financial and tax matters because I didn't have that much. But the problem with that thinking. And
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  I think many of us think that. You probably think that too. Is that if we don't think we have enough
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  to take care of, then we never take care of it. And so then we end up making mistakes and losing the
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  resources that we do have. And then we never become rich because, well, we've made choices that
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  lead to us never being rich based on the belief that we're not rich. For me, that was rooted in
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  growing up in a wealthy community in Miami, where my family was the poor family, and I put poor in
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  quotes because it was very confusing. And I think many of us have had these confusing realities
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  because our parents were very confused when it came to money. And so I think it's very helpful to
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  look at where did we come from when it comes to money, what did our parents
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  pass on to us belief wise when it comes to money? Did they teach us that we need to hoard what we
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  have and make sure that nobody ever knows how much we have? That's the reality for a lot of
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  inheritors, by the way. Did they teach us that we should spend it as soon as we get it? That was
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  certainly one of the beliefs that I got from my dad, and then from. Which in some ways was actually
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  a good one. I liked that one a lot because it gives me a lot of freedom around money to like,
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  know that, like, I'll always make more. I really love the belief that I'll always make more. That's
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  a great belief. It's one that I've chosen to keep. Or is it like from my mom, for example? We're never
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  going to have enough. We're going to run out. Oh my God, we don't have enough. So you've really got to
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  look at and I really had to look at what are the beliefs that I inherited. What are the beliefs
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  that you inherited around money that may be keeping you from making good decisions? And when I
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  say good decisions, I mean eyes wide open decisions versus what I call eyes squeezed shut
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  decisions. Eyes squeezed shut decisions are the kinds of decisions that are going to lead to you
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  having to learn the hard way by being ripped off, taken advantage of, scammed, which is happening
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  more than ever. A friend of mine the other day just told me his mom was scammed out of
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  $1.3 million. All of her money was taken. My own mom lost a Bitcoin,
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  which at the time she lost. It wasn't that much today. It would be worth more. At one point it was,
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  what, 100 and you know, $30,000. Scams are prevalent and eyes
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  squeezed shut. Decision making results in us being taken advantage of, ripped off and scammed and
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  learning the hard way. And that was the way that I had to learn over $1 million worth of mistakes
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  made and lessons learned that I'm sharing with you here. So at first
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  started to occur to me that something was off when my I was going through my divorce with
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  my husband, and he had hired a forensic accountant because he was a stay at home dad, and he thought
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  that I was going to take everything, which was probably a good idea for him to think that and
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  protect himself in that way. I wasn't going to take everything. But that's what he thought. He
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  hired this forensic accountant, and the forensic accountant looked at me across the table and he
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  said, Alexis, your books are really messed up. And I didn't even know really what books were at that
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  time. I had just started my business. I'd never been in business before. Nobody taught me any of
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  this, but I knew he was right. Fast forward two years and I'm now
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  post-divorce. I'm paying child support and alimony, and my business is doing over $1
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  million a year. And I'm about to start my second business, and I get a letter in the mail from the
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  IRS that I'm being audited for the same tax year that that forensic accountant had told me that my
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  books were messed up and my heart just sank. And I
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  spent two days just sobbing, beating myself up, berating myself. How could
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  you do this? How could you be so stupid? What is wrong with you? Some awareness came in. I was like,
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  okay, okay, okay, no, this is not this. You got to learn from this. You got to learn from this. And
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  I stopped crying and I said, okay, what are we going to do? And I realized I was going to need to
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  hire support. I wasn't going to be able to handle it on my own. And that what I needed to do was I
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  needed to hire support, and then I needed to take all of the energy and the emotion and the
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  attention that was going into beating myself up and berating myself, and I needed to put it into
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  building the new business. And if I could take that energy and put it into building the new
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  business, then I would be able to build something of value, and I'd be able to pay the people that I
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  was hiring for support. And so I did that. I found a CPA, and I had a teenager personal assistant at
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  the time, and I said to my personal assistant, teenager Corey, you work with the CPA firm. Just
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  get them whatever they need. Do not talk to me about this unless there's some action I can take.
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  Otherwise we're not going to talk about it. I knew it was being taken care of. They would talk about
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  talk to me about it when they needed to. Every time my mind would go to think about it, because
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  it did, it wanted to keep thinking about it. And that's, by the way, what our minds do, right? Our
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  minds like trying to protect us. My mind was trying to protect me by telling me how stupid I
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  was. So any time it did that, I would say nope, nope. And and and literally like Velcro, it felt like I
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  was ripping Velcro, like heavy Velcro away from something. I would rip my
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  mind away from it and say, okay, what is one thing that I can do right now that will grow this new
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  business, whether it's write an email newsletter? And sometimes that was in the middle of the night,
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  you know, I'd be up in the middle of the night stressing about it. Nope. We're going to take some
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  action to build this new business. And with that, I built my second million dollar business in just
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  18 months. All of that energy that would have otherwise gone to Really nothing useful or
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  helpful. I ended up with a no change on that audit, by the way, which means that I didn't have to pay
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  any more money to the IRS, even though two years before the forensic accountant had said your
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  books were really messed up. And that was a huge learning experience for me, and it can be a huge
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  learning experience for you, too. It's one of the things that I'll be teaching you as part of this
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  great wealth transfer podcast, because. So many of us are terrified,
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  right, of, oh God, if I do this wrong on my taxes, I'm going to go to jail. And actually,
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  there's so much of what we do with our tax reality is voluntary. It's based on us being
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  educated. We don't have to be afraid of it, but we are. So what I didn't realize was happening at the
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  time is that, bit by bit, I was actually building my own family office. That first experience with
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  hiring the right support with the CPA firm, getting my personal assistant, working with them.
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  That was the beginning of what would later become the T in my tax part of my family office. And
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  there's four parts legal, insurance, financial and tax. And I had to learn how to build each one of
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  those four parts through these very expensive, very, um, heart, you know, wrenching
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  mistakes that I'm going to be sharing with you. That was nearly 20 years ago now. And when I look
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  back over my life and all of the lessons that I've learned when it comes to legal, insurance,
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  financial and tax matters, and the one decision that I made that probably made the biggest
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  difference was that I started treating my legal, insurance, financial and tax reality. These four
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  pillars, like a family office with me at the center of it as a steward. Now, when it was
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  happening, I did not know that's what was happening. What I thought was happening was that I
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  was crawling out of a huge hole that I had created for myself because I wasn't taking my
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  legal, insurance, financial and tax systems and matters seriously, And I knew that all
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  of these things that had cost me at that point, you know, over $1 million were there to teach me
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  something. At the point that I started building my family office, I didn't yet know what it was. But
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  now I can look back and see that it was that the time to build your family office isn't when
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  you're rich in your own mind. It's not when you're a Decca Center millionaire or
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  a billionaire. The time to start to build your own family office is actually when you think you
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  don't need one. Now, that might sound totally counterintuitive, but it is by getting those
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  systems in place and growing into my adulthood as it related to my legal, insurance, financial,
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  and tax matters, that I was able to ultimately create a sustainable foundation for myself that I
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  could hold and feel confident and know that I could go out and borrow the money that I needed
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  to be able to grow, invest in, and grow my businesses. I never raised any capital to grow my
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  businesses until I was certain that I could be a good steward of other people's wealth, of other
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  people's money. And I see a lot of people who are raising money way too soon, and they're just going
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  to lose it. They're going to lose all of the money that they're raising because they don't have the
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  systems and structures to hold it. I see so many people who are saying, I just want to bring in a
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  business partner, but you can't bring in a business partner when you're expecting them to be
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  able to clean up your mess. And I wanted it to believe me. And when I did bring in business
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  partners from that place, they ended up taking from me. They ended up putting me in a worse
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  position than I would have been in if I had, or now that I have been able to bring in business
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  partners from a place of strength and clarity, right? I really created
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  situations for myself where I was ripe to be taken advantage of, scammed and ripped off
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  because I didn't know what I didn't know, and I was looking for a savior. You know, I was like this
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  victim who was like, please come save me. Come save me. Because I really didn't want to look at these
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  things myself. And I would say that it came to a head after I had built
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  $2 million businesses, and I had lost probably close to $1 million at that point
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  already. I'd gone into debt selling my business to the wrong person. I should have made $500,000 on
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  that sale. I ended up losing $250,000 and taking on $250,000 of debt, so that I could
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  transition all of my clients and my team members in a good way without harming any of them. Took on
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  250,000 of debt for that. It was just one of the mistakes. I had a $50,000 lawsuit that I settled.
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  I was in the right, but I settled it for $50,000 because I didn't have the right insurance, meaning
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  that I would have had to go out of pocket to hire a lawyer to fight the lawsuit. It's like, you know,
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  let's just. Give her $50,000 and say, thank you very much for this lesson. And there were a number
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  of experiences like that that I'll be sharing here that will help you to start to see what you
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  can learn without having to make the mistakes yourself. On the other side of all of that, I
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  decided I was bad at business and I should just walk away from everything, move to a farm and file
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  bankruptcy. And that's what I did. I said, I'm just bad at business while I was there, and I
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  spent a year doing only what I would do for free. So that I could remove. Any idea
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  of who I was when money was my decision maker. So if there's
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  one thing that I want you to take away from this episode, it is that the time to start making eyes
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  wide open decisions about your legal, insurance, financial and tax matters is right now. If you
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  have any desire To feel as if you've made it, to feel rich, to be rich, to be able to contribute
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  to a thriving and flourishing world. The time to start is right now, no matter how much or how
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  little you have. And I'm going to be taking you through episode by episode, helping you to do
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  exactly that. Going through all of the legal, insurance, financial and tax pillars, the mistakes
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  that I made, the lessons that I learned, interviewing guests that are going to help you
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  through their experiences, experts and regular people taking you behind the scenes into the
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  conversations that just are not being had. So like follow, subscribe. But most importantly,
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  please share this episode with somebody that you need to be in the conversation with right now.
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  Because the more that you're in conversation about these matters with your friends, with your
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  family, with your parents, grandparents, if they're living, the better it's going to be for you and
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  for them both short term and long term. So share this episode and I look forward to seeing you on
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  the next podcast.