Lessons - How The Top 0.01% Think About Money | Ron Diamond, the Founder and Chairman of Diamond Wealth

Welcome to Lessons episodes of Success Story, part of the HubSpot podcast network. These lessons episodes will be shorter conversations with past guests, valued members of the success story community, and myself. They'll be focused on teaching you actionable, insightful takeaways that you can use to upscale your personal and professional life. So you think that some of the future of philanthropy, and it's not, this is not to generalize it, this has to be all a philanthropy, but it's, again, it's more doing direct investment into causes that you can actually see, I think something or, yeah, I think that if you look at milk and or you look at gates or you look at what Bloomberg's done, you, you can take these business minds and you, again, and apply it more toward to solve some of these real world problems. I don't think it's going to come from the government, and I don't think it's going to come from the corporate sector. I think it's going to come from these entrepreneurs who can make a difference. So I think for me, philanthropy is the most important aspect of family office because at the end of the day, you could only, you know, the Pharaoh is trying to bury themselves with money and that didn't really turn out to be a great idea. What else could you can't take it with you? So giving it away and doing it in a way that are important to you is something that's really, really relevant. So we do a lot of work with family offices, figuring out ways to, and prostate canches near and near to my heart because my father passed away from it. No, I think that the smart, a smart way to look at philanthropy because I think the way that I default to looking at it is the way that I think most people do is just how do we put money into an organization or a government or something that's already set up? That's not the only way to truly do philanthropy. And also what's the first, if somebody has a philanthropy, the first question people ask is what's the overhead? It's not a good question. You don't go to Apple or Microsoft and say what's your overhead, if they're relevant what your overhead is, it's what's, you know, you could have a lemonade stand that the overhead is 1%, but you're going to only create $5. So I just think you have to start asking the right questions and looking at it from a big picture standpoint. Can we teach over some of the wealth transfer strategies that some of these individuals use? I think that'd be very valuable. So if somebody doesn't, you know, doesn't have the advisory of a billion dollar family office, but I'm sure some of the strategies can still be leveraged. So when you have money and you're trying to pass it on to your children, your kids, what are the strategies that you can look into and use? Well, when I ran my hedge fund, I remember I think I was like 31 years old and I was in a, it was a billionaire's office and he had a state planning attorney in the meeting. And he had no idea what he was, the estate planning attorney had no idea what he was talking about from the, from the business, from the, from the finance standpoint. And when the meeting ended, I asked the, my perspective client who ultimately became a client and I'm like, why was he, why was he there? I did it respectfully and he kind of put his hand on my arm and he's like, you'll, you'll understand one day he goes, the goal is not to become a billionaire. The goal is to be worth zero, but control as much as you can. And all these trust in a state planning attorneys, they're just getting stuff outside of people's estates. And that was sort of like an aha moment for me when I realized it. So what these trust in a state planning attorneys do and a lot of the wealthy people, the, the family offices are closer with their trust in a state planning attorneys than they are the financial advisors. Because the goal again, it's not to be a billionaire, it's to be worth as little as possible, but control as much as you can. That's trans, wealth transfer. It's a very tricky issue because you don't want to give the kids too much money, right? So that's a problem unto itself. But you want to bulletproof yourself for litigation. You want to make sure that you have the ability to get things out of your estate, but you still can control it. And that's all these trust, that's all these trust in a state planning is due. And that's really it. So if you, if you start a trust and you start to transfer your assets into that, then you can become like a managing director of that trust. And that does mitigate some patch of responsibility, correct? Yeah, a lot. If you look at anybody, any family officer, anybody who's worth, you know, a lot of money, they've got a state planning attorney in place and they've got trust set up and they've got stuff outside of their name, it might be in their children's name. It might be, but they, they structure where their bulletproof from a litigation standpoint and they maximize the benefits they could, they could use within the law of what, what you can do to transfer. Of course, yeah. No, I think that that's the one thing that's very frustrating is that the average person, like they, they pay such a significant amount of tax and everything they do. And it's, it's usually because they don't have access to strategies that can mitigate tax. And that's really it. Like very legal strategies. Look, the tax code is absurdly unfair. I mean, it is what it is. If you look at the people who've made the most private equity, hedge funds, I mean, you're paying, you know, you're carried interest. I mean, a lot of that is tax is, you're, you're benefiting from the tax system, real estate, you know, 1031 exchanges, you're benefiting from that. So a lot of the people who've made their money has to do it, whether it's real estate, private equity, hedge funds. It is utilizing this, the tax code and being able to benefit from that. Yeah. No, it's, it's just smart to think that outside the box and just speak to people because these strategies are not mutually exclusive to wealthy individuals. That's the thing like they can be used by anyone. And then I guess the other question, is there any other, any other, I guess, before we pivot into like deals that you look at, is there any other strategies or, or tips that you pick up from dealing with these ultra high net worth wealthy individuals that would be just good that could be utilized by somebody who's obviously not in a lower income bracket? Yeah, I mean, I pick up things every day from, from them and I think the most important thing I think I do is I try to, I'm, I'm, I'm good at it and I'm not great. I'm getting better. Listening is a skill set that people in general aren't really good at. Listening to people and the people who've done quite well, rather than talk so much, just listen to how they did it, what they did, what their strategy was. I think listening to people who've been successful for, for anybody, what techniques they've used, what strategies you've used, what's their, what their MO is, I think the ability to listen is a skill set that most people are not really good at and they're looking to think about the response to an answer before they actually fully listen to the full question. You notice that that's something that is particularly like a, a particular skill set that people that are ultra successful, they have that in spades, like the ability to actively listen to sort of take a second seat in the conversation to make sure they get 100% of that information. Well, A, you're very good at that. B, my dad told me that he was a banker and he said, you could always tell the lawyers and the entrepreneurs because you go to a meeting with 10, 12 people and the lawyers would come in and in general, they would try to show the people that they're the smartest guys in the room. However, that is, the entrepreneur, their agenda, they want to find the smartest guy in the room. All I try to do, all I've done is just surrounded myself with people that are smarter than me in various areas that I trust implicitly and delegate and if you do that, I think it's very hard not to succeed. I agree. No, that's very smart. Okay, and then last thing that I want to go into just very briefly, you get access to some of these incredible deals, but then you put these deals in front of your network who trust you implicitly to basically make sure that these are good deals. So when you look at some of these deals, what are you looking for? Because that's a lot of responsibility too. Right, but again, they also bet the deals too. So they've got another level of diligence and a lot of the deals we get might come from the family offices that we work with where they see a deal is just too small for them. Right? So a $20 million deal might be too small for them. They love the deal. They've vetted it. It's a terrific deal risk reward, but it doesn't make sense. It's like an individual investing $50. It doesn't make sense to do the diligence. So a lot of the deals we get are from the large family offices who see really attractive deals. It's just too small for them. It's not too small for me.