Ep 159: How Very High Net Worth Investors Invest with Tad Fallows

I don't see it as necessarily a moral good. If we had a country with, you know, 300 million people and 300 million companies, they're all one man shows, that wouldn't be the best outcome. So I think it's just a different thing as opposed to a better or worse.

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On today's show, we have Tad Fallows. Tad is co founder, managing director at Long Angle, a private community for young, very high net worth investors. Prior to founding Long Angle, Ted was co founder and CEO of iLab Solutions, a SAS company providing lab management software to universities and research hospitals. Without taking any venture capital, Ted and his partners grew Ilab to 75 employees, serving 35 of the top 50 universities in the world, before selling the business to a strategic inquirer. Chad, good to see you again. Welcome to the show.

Thank you, Chris. Really excited to be here.

Yeah, I'm looking forward to this discussion because we're, we're in an interesting place in the economy. There's a lot of questions and I think myself and the audience are really going to enjoy some of the topics we're going to discuss today. But before we do, I'd love to share, I'd love for you to share a little bit more with the audience about your background, your exit from your company here before you got to your current role with Long Angle.

Yeah, thanks so much. Happy to share that. I've been running Long Angle for about two and a half years now. And the kind of reason that my partners and I started this is I originally out of college, shortly worked in consulting, but then for a long period of time I bootstrapped the software company. We did software as a service focused on medical research institutions, which is a great experience. Got to see, you know, every college town in America and a lot of them overseas. And you know, when you bootstrap something, you go running as three guys in a garage to, you know, ultimately got to almost 100 people. So you get to wear every hat, whether that's finance or legal or HR or it any of those things. It was a great learning experience for me. But you know, the probably relevance for what I'm doing now is that process of bootstrapping a company that we paid ourselves almost nothing from you know, our mid-20s to our mid-30s, and then on one day in our mid-30s got essentially deferred compensation for the last 10 years work. And so, you know, on one day had a real order of magnitude change in our net worth. And that led to a whole new set of questions that we had not encountered before on the personal finance world. Whether that was things around how do you take advantage of your newfound wealth and you know, provide benefits to your kids without taking away their ability to succeed on their own terms, without spoiling them, you know, without undermining their drive or you know, more practical financial things like trust and estate planning or alternative assets or umbrella insurance. And so those were a bunch of new things. And really the challenge that I had there is that out of the advice for those kinds of, you might call it very high net worth questions coming from somebody with a product to sell, whether that was Goldman Sachs or a life insurance company. And we really wanted to set up a community of peers or friends really who were in a similar situation where nobody was trying to sell each other anywhere. It was just kind of peer to peer advice on this new set of questions. And so that was what led me and I have two partners, Matt and Sriram, to the currently working on which is a private community for very high net worth investors. Peer to PE connection. It's called long angle.

Yeah, well, what I love is Tad you this was born out of, out of a desire and really a need for information and to figure out, you know, what do you now do with this, with this wealth that you've created. And I think, you know, one of the points you made was, you know, you got this, this deferred comp after, you know, working for 10 years or so a decade on, on your business. And that is one of the things that entrepreneurs do, right? They're paid last. And I think a lot of people, they don't want to take that risk. They play it safe. They say, oh, okay, I'm going to just take this job and do that. What led you to want to start that company, if you don't mind sharing that.

I think I'd always had an interest in being an entrepreneur and actually in retrospect, as I look at it, you know, my dad was a journalist, but always kind of, you know, doing his own thing as opposed to seeming, you know, he ended up at one company for a long time being a Journalist as a fairly sort of solo practitioner kind of thing. My brother is actually an entrepreneur. He started a company that was successful that he ultimately sold to Google. My grandfather actually started a manufacturing company. So think of a bit of a family. Yeah, exactly. And then I would say also, you know, a lot of this retrospect looks like more of a plan than it was at the time. But I think the timing was good. Where I've been working in consulting for a few years, but I wasn't yet married, didn't yet have kids, didn't yet have a mortgage. So I think being in your mid-20s is not a bad time when you don't have those obligations and you can afford to fail. You know, I think we were lucky that was successful, but that was as much luck as it was hard work. And I think it easily could have turned out differently. And at certain points, it certainly got close to looking like, hey, maybe this isn't really going to make it. We need to go back to the W2 job. So the way that I went into it initially was saying, hey, I want to have a great experience here. I want to feel like if this is not successful, if it doesn't make money, still a good experience. I've learned a lot. I've worked with my friends, I've given it a go. And then maybe I can, you know, go back to consulting or. Or some other career. And I would say it felt that way. There was a little bit of a moment there the first two or three years, like, hey, this is great. It's been a fun learning experience. We're working in a garage, you know, with buddies. Then after you got to sort of years, three or four, it was kind of there in a revenue, but it wasn't really reaching escape velocity. And now at that point, I was married and my wife was saying, hey, what about the salary thing? If touch and go for a while. But fortunately, right about that point, we, like a lot of companies, had a quote, pivot and started growing our revenue a lot more quickly and hiring people faster and margins. So the economics got good when they needed to.

Yeah, that's great. And I think, look, entrepreneurs, in my opinion, I'm very optimistic. People talk about, oh, we're running out of the environment, we're destroying the environment, we're running out of water. All these issues. I think that entrepreneurs are going to solve these issues. I think that that's one thing that America has fostered is this culture. And probably like you kind of touched on there's some genetics, right? Like people that came to this country, came seeking a better future, the opportunity and in our blood, it's probably literally in our genes. So I'm very hopeful of all those things. And you also brought up another good point, which is the statistics don't always show all the failures of all the businesses that are out there. All these businesses that started, they fail. We tend to glorify entrepreneurs, Elon Musk and Bill Gates and I always think of Michael Dell and Bezos and those guys because they were who I studied when I was in business school. But my wife and I both, both went through the same process, but we kept our jobs when we started our businesses. A lot of people ask, why did you do that? Like, well, you know, it was kind of, it's kind of a safety net, but it gave us this opportunity. When did you decide to leave your job in that process, Ted?

You know, we did try initially to, you know, do it on nights and weekends. But you know, the both, you know, my partners and I were both in consulting and it was one of those things where that is a 60 hour week job as it is. You know, it is, nights don't really exist. You know, you kind of take a break for dinner and then go back to work and then, you know, weekends exist. But I think we ultimately feel, felt like, you know, after six months or so of trying that hey, this really isn't going anywhere. We're just sort of wasting our time. So either we need to commit and take a leap and make it happen. Now I, I don't think that is really right in every case. I think there's other cases where if your job is more manageable or if, you know, you have greater financial commitments and so you sort of can't afford to take that approach. I think it really depends on the person. You know, the other thing that I would do if I were looking in retrospect and you know, doing it differently, one thing I probably would have done was clear setting up clearer targets up front of saying, okay, after six months we need to be here. You know, we, let's say we want to be at stage 10, we need to be at least at stage 5 or else we're going to call and do something else. And after 12 months we need, you know, we need to be at stage one, 20, 10, and maybe we want to be at stage 20 having some of those thresholds so that, you know, it's be a lonely journey and a difficult journey with a lot of setbacks. As a, you know, as an entrepreneur, maybe you'll get the occasional, you know, Facebook or Instagram or something where up from day one. But in practice, you know, for the rest of us, it's not always going to be clear whether you're on the path to success or not. And I think there is, you know, a risk of giving early, but I think there can also be a risk of staying too long. You know, your time is really worth something. And, you know, most people with the ambition and drive and ideas to start a company probably could start more than one company, or they could go and be successful as an employee somewhere else. So I think you, you know, that's what I advise people who are looking at starting one is to have those thresholds also. So you don't agonize every night about saying, is this working or not? But you sort of know, hey, you know, here's the times we're going to check in on it, and then we'll put heads down until we get to that next checkpoint and we set some, you know, minimum thresholds. So that's one thing that, that I would look at.

Yeah, I think that's great because you have those and you also say, hey, we're on the right track. Right. We're not floundering out there and doing that. Yeah. James Altucher, I think I'm saying that right. Wrote a great book. I think it's called the Rich Employee. And he talks about that, hey, you can be kind of an entrepreneur, right? You can be like inside of a company. I did that in a lot of ways as a sales rep. I had a lot of flexibility, a lot of freedom. But at the end of the day, I was creating wealth for somebody else shareholders instead of. Instead of for myself.

And I would say, you know, by no means is entrepreneurship for everyone. You know, my wife, she is very successful as a, you know, executive at a bank, but she would never want to be an entrepreneur. And so I think I would not encourage anyone does it just for the money. Hey, you know, I want to get as rich as Elon Musk. Now, you're not going to get as rich as Elon Musk. And your expected value of working that hard is probably going to be higher if you go work for Google. And if you be an entrepreneur, I think you should do it because you have that drive or that passion. Either this idea or just the idea of, I want to work for myself, I want to work with my friends. I think those are the reasons to do. But I don't see it as necessarily a moral good. If we had a country with you know, 300 million people and 300 million companies, they're all one man shows that wouldn't be the best outcome. Also, I think it's just a different thing as opposed to a better or worse.

Yeah, Sam Zell, I just finished reading his book. He passed away here recently. I thought it'd be a good time to read it. And he said, you know, if you look at most billionaires, they didn't get that way because they wanted to make a billion dollars. They got that way because they were passionate about an idea. And I think you're right. Like if you're passionate about something, you really want to go after it. That's a great reason to solve that problem as an entrepreneur, but it's in a lot of ways, like being a professional athlete, we glorify it. But such a small percentage of athletes become professionals and even a smaller percentage of those actually become wealthy doing it. And really for most people it doesn't make sense to, to pursue that passion. So I think there's a lot of similarities there. So Tad, you, you exit your company here and you said it was about three years ago. Is that when it was.

No, it was about six years ago.

I'm sorry.

Okay. I took a while at working at the acquirer and you know, frankly, just my kids were 1 and 4 at the time and I think my wife had been a single parent up until we sold the company. So also some, you know, time to reconnect with the kids ended up being extremely fortunate timing. You know, I wouldn't advise anyone with a brand new baby company. So it was nice to move to a job with more finite hours. But then it was about, so we sold it about six years ago and then about three years ago we started working on this project.

Gotcha. So why not? There's so many, you know, wealth advisors out there, people that caterpillars towards individuals like yourself. Did you explore those options? Why not just go with somebody that's already out there, then go ahead and start your own community or group?

Yeah, I mean, it's a great question and I think those are a couple different things. First, I would say what we do in this group is not purely or even primarily about asset allocation. That is certainly a set of things people talk about is, hey, direct indexing versus ETFs and tax loss harvesting and what's the role of alts in my portfolio and is inflation going. Interest rates, rates. But it is not exclusively those discussions of asset allocation. I think there is a whole suite of things involved with these Questions. As I said, probably the most important question that our members are grappling with is this issue of, hey, my kids are growing up in a very different financial environment than I grew up in, and how do I take advantage of that and give them the best of these opportunities without depriving them of their ability to succeed? So I think if you look at a lot of entrepreneurs or, you know, other health creators, whether they're, you know, successful lawyers or doctors or other things like that, they'll tell you a lot of their reason for success is the grit and drive that they developed, you know, earlier in their life and the challenges that they had to overcome. And so, you know, then the question is, how do you both personally enjoy your money and give those advantage kids without, you know, having some of the downsides of wealth? So I think, you know, that is a big suite of topics. There's also other things that are just maybe, you know, more kind of lifestyle actions of like, hey, you know, we want to take a family trip to Costa Rica and, you know, we can afford to spend a lot of money on it. What do you guys recommend as, you know, a good travel agency to work with or a great, you know, great place to stay? We'll have some memorable experience questions like that. And then also, I think a big part of what people are trying to do, you know, in the community and what I wanted was really unbiased advice where if you, you know, are trying to figure out, let's say you do want to hire a wealth manager, well, which one should I hire? I can go interview five of them. They're all going to tell me why they're the best. But if I can talk to a people in my same situation said, okay, well, how did you look at a, you know, traditional investment manager versus a family office or a multifamily office or, you know, with, you know, fee only versus Aum based. I think we that was a big part of it is looking for advice from people who are actually personally in that situation and where you have to wonder, you know, what was their advice coming from? You know, I think in the wealth manager world, you know, I don't personally use one, and I would say the majority of our members don't use. But that is not a, you know, philosophical or moral opposition. I think there are a few cases where it does make a lot of sense. I would say, you know, one is if you're just somebody who doesn't have a lot of interest in, you know, financial topics or, you know, don't have the time to do it or don't want to develop the expertise. I think there's nothing wrong with, you know, paying someone else to do that. And then there's also, you know, like any profession, there's a whole spectrum from the people who are, you know, truly experts at what they're doing and truly committed to the success of their clients, to the people who are just trying to get aum and don't really care about the returns they're giving. And you know, there's everywhere in between. So I think you need to, if you do choose to work with someone, you really want to do your due diligence because it's, you know, if you have a lot of money, then 1% of a lot of money is still a lot of money. And so, you know, it's a very big decision. And you know, if that person can drive an extra 2% returns for you, make a big difference if you compound that across 10 years. So it's worth doing a lot of, of research. But even though, as I said, I, most of our members don't work with one, that's, you know, there's nothing wrong with that decision.

Yeah, no, that's, that's a great point. And I love, and this is why you're on the show, Tad, and you, you talk about very high net worth investors, which is really what, what Long Angle caters to. Before we, before we jump in into the next discussion here, can you define that for our audience? Sure.

I mean, different people will define this different ways, but if you look conventionally at the, you know, private banking industry, they will sort of set three different groups. They'll have what high net worth individuals, which are generally about 1 to 5 million dollars of investable assets. Then they will have very high net worth individuals, which I think historically has been seen as about 5 to 30 million of investable assets. And then you have ultra high net worth individuals which are 30 million-plus. You know, you could quibble with this, you could say with inflation, maybe it should be, you know, 10 to 50 million or something as your definition.

We won't argue that today.

We'll go, yeah, you know, I would say broadly our members is in the, you know, 5 million to 50 or 100 million. I, I think, you know, when you get up into the 500 million, the billion range, that's typically where you get this called family offices where someone actually, they don't just manage their things personally and they don't go to some third party. They actually build an entire company or entity that is Just managing their vacation houses, their planes, their investments, you know, all these different sorts of things. But I think there is a gap between or people who tend to find a lot of value in our community in this between say 5 and 100 million where it's just not economically rational to set family office. But you do have a lot of complexity. You know, you are likely to pay estate taxes, you may have, you know, multiple properties, a lot of illiquid assets, maybe a company started you haven't fully exited from and things like that. So anyway, very high net worth, long story short is generally seen as 5 to 30, although I define it a little bit more broadly.

Yeah, thank you for doing that. Richard Wilson was on our podcast, he was the second guest on here and he focused on sentimillionaires 100 million plus. And one of the tenets of the next low income show is let's learn from those individuals that are ultra rich. Right. Because if you want to get to a million, a million is not what it was. As you said with inflation 100 years ago, it's just not the same thing. And you know one of the challenges we have a lot of the members of our community, Tad, they're first generation coming in to these levels of wealth and the access that they have are they're looking at people that are advising maxing out their 401ks and just traditional 6040 portfolios. But then when we look at the very high net worth and the ultra wealthy, they don't typically have the same types of allocations. What have you learned through the long angle community with respect to how these very high net worth individuals, very high net worth investors operate compared to your traditional employee that's just putting their max into their 401k.

Yeah, that's a great question. And one thing I will say you mentioned a lot of your community is first in wealth. I would say that is in terms of who I'm talking about. I will also say the bias of our community is almost entirely first generation, probably 98% people, the original wealth generator and also skewing relatively young for this net worth level very heavily 30 to 49 years old. So when I talk about people are doing it really is people with that profile of say your 40 year old who you know has has been successful. If I look at and you're and.

Sorry to interrupt but and you already mentioned the family and that's you know one of the big drivers is, you know, how do we teach our children? How do we do this? We're going to get back to grit that you mentioned. But yeah, so let you answer that question. What have you learned?

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Yeah, so one thing we've done, which I find I just did, had a personal curiosity, but a lot of our members have found interesting is we do an annual benchmarking study where we ask all of our members, we set, I don't know, maybe 50 or 60 categories, and we say, okay, how does your personal portfolio break down across all these categories of both assets and then different kinds of debt? And then we, you know, aggregate all that data together and share it in a way, you know, expose anybody's personal data. But just in aggregate, what are people doing? And also looking at where is there a lot of consistency and where is the broad spread of strategies. If I were to just kind of call out some of the highlights from the study that we did last year in 2022, we haven't yet done the 2023 version. I would say in total of people's portfolios, a little bit over half of it is in company ownership of some sort, whether that is public these of stocks or private equity or venture capital or something where you have an equity position, a little bit over a quarter of it is in equity, in real estate, and in 20% or so is in a combination of cash, bonds and other alternatives. I'd say the biggest change that we saw from our 2021 to the 22 was a pretty material shift away from public stocks toward a combination of private company ownership and real estate. I think some of that is probably was driven during that period by performance. Those asset classes where the public markets went down, they're sort of a natural bouncing. And same with real estate, you know, going up during that phase. And some of it was intentional rebalancing. You know, a couple other interesting things. One is in terms of primary residence, we then did a breakdown based on where people's net was and really all the way up until about $50 million of net worth. The primary residence really maintains a significant or material portion of the balance. I think when you look at, you know, people in maybe the, you know, bottom end, that high net worth category of 2 to 5 million, it's about 25% of their net worth. But when you go up to people with 25 to 50 million, their real estate primary residence is still about 13% of their net worth. So people are, you know, kind of upgrading to houses in. Not surprising, but still interesting.

Maybe multiple, maybe multiple properties, right? They may.

Yeah. Well that was actually their primary residence we looked at, you know.

Oh, that was only. Okay, I'm sorry.

So yeah, you're person with $40 million has, you know, maybe a six or seven million dollar house. There's.

And that seems reasonable.

Yeah, yeah. And then although one that's probably is more surprising is only 25% of our members do not own a primary residence. Then of those who do own them, about a third of those don't have a mortgage at all. Only about half of our members have any sort of mortgage. It's interesting, while our members tend on general to be quite aggressive in terms of their asset allocation, like holding very little cash and bonds, you know, together those are only maybe 15% of their portfolio. But on the flip side, they're also taking very little leverage. I would say about 80% of our membership has debt that's less than 25% of their net worth. So you know, put differently, If I have $10 million of net worth, you know, that I'm going to have maybe you know, 12 million of assets and 2 million of, I think a lot less leverage position. And that includes, you know, primary residence mortgage I think. And this is one of those things, you know, back this idea of entrepreneurs. I think what you generally see is to take a big bet or a big risk on their company, but then the rest of their life, you know, they don't want to take a lot of leverage to, to compound that risk. So I think, you know, that those are some of the, the main things that we're seeing. I will say that, you know, I personally am probably, you know, don't look exactly like these. You know, I end up during, not today, but maybe three or four years ago looking at the super low interest rates and saying, hey, it seems quite unlikely that if I can borrow at 3% and the government is, you know, spending and borrowing like crazy, that inflation is not going to be above that 3%. So a good time to sort of load up on debt and Buy real estate. I think that turned out to be a lucky hypothesis. So, you know, you do see a spread of things. But you know, in general those are some of the key points from that benchmarking survey.

That is, that is really interesting and I love to look at this because like, you made a good point, Tad. It ebbs and flows, it changes a little bit with respect to, you know, is equity markets, real estate markets and those sorts of things. But it is something that's been common, you know, throughout the four or five years that we've been doing the podcast as we bring on individuals that talk about the characteristics of high net worth individuals. You know, real estate and company ownership, you know, is significantly higher than what you see. You know, well, it's signal, it's significantly higher than basically zero, which is your typical, you know, asset allocation if you talk to, you know, kind of a traditional financial advisor. But I think that's really interesting what you mentioned on the debt because again, going back to Sam Zell's book, he talks about the importance of liquidity and really the, also the importance of not being over leveraged. And I think, you know, as an entrepreneur you learn, you know, the value of cash flow, right. If you can't pay your employees, if you can't pay your payroll, that, that sticks with you. You know, if you go back and you know, if you can keep your, your expenses low, then you have a lot more flexibility and really a lot more freedom is, is what I found in our lives and doing that. And we've, you know, we've kind of taken a hybrid approach. We use, we use some, we have income producing properties on our primary residence which help kind of balance that off. But I'd advocate that for anybody. Really.

Yeah. And I think no debt, it really depends on the nature of the debt. I think, you know, part of the reason, for example, that you know, my wife and I were comfortable a few years ago taking on a lot more leverage is you could get debt that was, you know, not callable. It was a 30 year term and it was fixed rate. So you knew, hey, if I can cover a two and a half or three percent, then I'm good. Doesn't matter if the nominal value of that property has gone down. The bank can't turn around and tell me that I have to sell it. I think, you know, I would be much more hesitant on something like a portfolio line of credit where if the stock market goes down 50%, the bank can say you have to sell today day. And it's, you know, the worst time or that rate can, you know, the Fed hikes rates again tomorrow and your interest rate is going up right along with, I think, you know, both speaking for myself and our community at large, I think much more comfortable with your fixed rate than your floating rate callable debt. Although I will say on the side, you know, one topic that comes up a fair amount is how much of a cash cushion do you need? Because if you look at somebody saying, hey, I want to keep, you know, 12 months or 24 months of spending, it's actually a pretty big amount of money. And if you just look at historical rates of return, let's say on average you're going to get 7%, so your money's going to double every 10 years. Well, then over the course of investing career, let's say that's, you know, 40 or 50 years, that could be four or five doublings. If you have, I don't know, let's say you've got $200,000 set aside to cover two years spending. If you let that double five times, that turns into quite a bit of money. So it's actually while conservative thinking about other ways to do it. So one thing that I see a lot of people do is these types of debt that I said, you know, I wouldn't want to take a lot out of like a portfolio line of credit. You can have that available and just work with a bank and say, hey, look, I've got this portfolio $5 million here. Let's just agree that if I need to, I can borrow up to 60% of that value. So $3 million. I now don't necessarily need a $3 million cash cushion because of EMC comes up, or I see some property that I need to buy tomorrow, all cash, I can temporarily draw on that. So I haven't, I don't have the cash drag. But at the same time, I do have that flexibility. I think that's, you know, something. There's really no harm. You're paying almost nothing or nothing to have that, you know, flexibility available to you.

No, I love that strategy. It's something that we've been doing for a long time. And again, you know, especially if you're, if you're, an entrepreneur, you want to have access to that capital because, you know, you may have more variability than somebody that has a fixed salary. I do want to get back to the family component, Tad, because this is something that has become really important to me. I think is, is a symbol. We live in Asheville, North Carolina. We live right down the Road or right up the road actually from the Biltmore. We're just two miles away from it. And the Vanderbilts are, you know, infamous for squandering a fortune in a lot of ways. And you know, I learned that, I learned this story and I said, well, how do you like, what do we do? You know, what do we do as a family? You know, I love the book Grit. I think it's by Michelle Duckworth, if I recall correctly. And it's something that's interesting, you know, because in society these days I've had a lot of these discussions, you know, where we want to, we want to provide or make up for challenges that people are facing out there. We want everything to be comfortable. We don't want, you know, our kids to fall and scrape their leg. You know, we, we don't want people to go through these challenges. But those challenges early in life, what I believe compound and create strength and resiliency. And you know, it's one of the things that I'm hesitant. It's like, well, you know, I want to provide opportunities for our children, but I also want them to develop that grit, as you mentioned. I love that you use that word and, you know, the resiliency to do that. What are some things that, you know, the long angle community talks about to help foster those traits in the communities or the community's children?

I guess you could say, yeah, it's a fantastic question. And I will say, you know, I probably will bring more questions than answers here. I would, you know, if I had this figured out, that would be my full time job selling that knowledge. But I can share, you know, maybe some things that have worked for me personally as well as, you know, some of what we see our members doing. I think, you know, first I'll start with one question that's a little bit different than what you asked, but it's a separate one of you talk to your kids about wealth. You know, if you have been successful and you do have a significant amount of money, at some point, probably earlier than you expect, the kids are going to come and say, hey, you know, daddy, are we rich? And how do you answer that question? And I think one thing, you know, I've had a lot of conversations also with professionals who work at these family offices or multifamily offices, asking how they to approach that. And they say the number one thing is, is honesty. And don't deny it or pretend because your kids will find out and you don't want them finally out by, you know, Wikipedia and seeing Some story about how you, you know, sold your company. And then that's, you know, because then you're creating this mystique around money and like, wow, it must be really important and really powerful if it's, you know, this taboo that people won't talk about it as one. Shoot, you're normalizing it.

You can search Zillow. It's like, well, dad, the house is worth a million dollars. You know, it's like, oh, whoops, it's. You got the Internet out there these days, right? Yeah.

I would say a lot of our members also try and have a open conversation about how money works with their kids and so, you know, talk with them openly about, well, here's what I do for work. You know, I make these loans and, you know, well, why would a company want to borrow money at those rates? And this is how it works. And the same way that, you know, you talk with them about the football team and, you know, talk about the strategies, as they get old, you get into more nuance. Hey, here's why the Cowboys did this, or here's why they signed this guy. Or, you know, if you're a camping, you know, affectionado, talking with them about different kinds of tents that you want to get and that thing. I think the same way if you, you know, you work in the stock market or you work in a business or you have a passion for those kinds of investments. Really including those kids in those discussions, like, hey, we are thinking about this rental property, and let's actually just analyze the economics behind it. You know, it's going to cost half a million dollars, and we think these units will rent for this much, and we have an allowance for the roof and for vacancy and those sorts of things.

Love that.

I think, you know, kids find anything that their parents will actually engage with them on to be interesting and so kind of building that up. It's not a separate thing that they have to learn for themselves. You know, I think getting back to this question of grit, I will not say that I particularly have seen, you know, anyone, the right answer there. I mean, I can share a couple of things that have worked for me. And I'll give full credit to my wife. I think she's, you know, thought more deeply about these things than I have, but I've tried.

We'll have her on the podcast next.

Yeah, yeah, you should. She prettier and more articulate than I am, but I think, you know, she talks about this sort of gift mall failures, and I think that is one of the most challenging Things to do. But I would say, you know, my kids are still relatively young. They're 8 and 11. And so just in their activities, recognizing, you know, my son's never going to be a pro tennis player, so letting him fail at tennis as opposed to, you know, trying to make that successful, that's really one of the things he'll get out of it. So, for example, we've gotten very into Boy Scouts. And you know, when he goes on the camp out, I say, hey, remember to pack your stuff, but not going to check anything he's packed. And I think, you know, may have forgotten a sleeping the first time, but he never forgot a sleeping bag again. So that was a small failure of being like, oh, shoot. You know, that's. He's doing that now. And now he's in high school and forgetting to write his application essay to of kind.

Yeah, that's so funny because my wife's like, did you, did you check the boys backpack? I'm like, I'm like, no. She's like, well, what if they forget their lunch? I'm like, well, they'll be hungry and they probably won't forget it the next time. So.

Yeah.

Yeah. And it's, it's, it's it. I love that because it's. How can we provide. Your wife said the gift of small failures. Is that the way she described it? Yeah, like failing forward. I. That's fantastic. And you know, I always, I talk to my wife, I'm like, how can we provide the opportunity for the boys to fail in a safe environment? Like we have two boys. I say the boys, but, you know, the children to fail in a safe environment because then they can learn from it. Right. Where it's not going to be detrimental to the fact that they lose an arm or something like that from a mistake they made.

Yeah. And I mean, another one that worked for us. I do think every kid is different. Our son is, you know, he's older, so my daughter doesn't have grades. You know, he's pretty academically oriented and so he really wants to get into a good college. And we made a point of he this past year or past couple of years and 5th, 6th grade. The first time he had real report cards with real grades. So saying, hey, we are not going to check if you're doing your homework. We are not going to check what your grades look like. You know, we will give you this first year. You do it yourself, you do it your way. If your grades are great, we're going to keep leaving you alone. If you have problems with the grades. This is going to be unpleasant for everyone involved, and we're going to ride you about it. And, you know, he rise the occasion there was all sort of 96 and 97s and he had both built a lot of pride. It made our lives so much easier because it was not asking him at night, have you done homework? It was just, you know, I presume you have, and until proven otherwise. And I think he also built a lot of pride in that of, hey, these are my grades. I earned this. This is not a family project. So again, it would depend on the kid. If he was less academically inclined, you know, we'd need to lean in more there. But. But I do think again, in those, nothing they really do at eight oven is going to have that much impact other than those character traits that you're building. So I think I'd be concerned if we were in a corner now where he's a junior in high school and we do this or, you know, he's at college and filling out there. So I feel like we've done a lot of things wrong as parents, but that one, that's one I feel good about.

It sounds like you're doing, you're doing okay there. Yeah. So just to recap that, I think, you know, making conversations about money natural and comfortable and obviously respond in a responsible manner. As you said, Tad, with your children is important. It's one of the things that we have on our five tips for raising. Raising money pros with your kids on our website. Also, you know, looking for those opportunities to expose them to different business discussions or like you mentioned with the real estate. I took a trip with my son last week to a lacrosse camp. And along the way we stopped at some of our car washes in those locations. And I had a business, a business lunch as well that he came along with. And he sat there and he got to kind of observe it, which. Which drew some additional questions and, you know, to kind of see, hey, this is. These are natural things. And, you know, these are. These are questions and these are kind of the process that we go through as we make these decisions. And on that note, the long angle community helps provide a community so that you can. You can share thought processes, frameworks to better improve not only your investment returns, but like you said, the ability for, you know, your family to create generational wealth and to have access to a lot of the knowledge, experience and expertise that only family offices used to have. Tad, can you share a little bit before we wrap up about the long angle community and how the audience can learn more or potentially even become involved.

Yeah, sure. So we are, the community is still growing now and I think it has gotten a lot better. We're about 1700 members and if you compare it with say 170 members, I think it's a richer conversation. A lot of, you know, some of these questions are universal like raising kids. Other questions can be very esoteric, you know, hey, who knows a good guy for Swedish, Israeli tax treaties. And you know, you need a very big group of members in order to have, you know, meaningful answer those questions. So it's something where I've never question, I've never answered. Exactly. More powerful as it grows. So we are excited to keep adding members to it. If people are interested in learning more, they can go to our website which is just longangle.com I'd also be happy if any members want to reach out directly. It's just TAD, TADongAngle.com be happy to speak with them. Our, you know, I shared our general member demographics. What we do in terms of reviewing new members is one me or one of my two partners interviews every potential member. So if somebody applies on the website to become a member, they can, I don't know, look forward to or not a zoom call with one of us. And we also have as a eligibility threshold, everyone is at least a quality client, which is a sort of SEC definition. But that means you have 2.2 million or above in assets outside of your primary residence. So just in terms of, if members want to think it'd be interesting to them that that is one of the qualification thresholds. But we'd be very excited to hear from anybody in your community who thinks that what we are doing interesting to them.

Fantastic. Well, I, look, I wanted to have you on Tad because we had, we had a great conversation here just, just a few weeks ago and I know a lot of, lot of people in our audience, a lot of listeners can draw a lot of value from not only the things you said, but potentially also from the long angle community. So we're going to have all that information you just provided in the show notes. If you want to learn more, you can check out longangle.com or get a hold of Tad directly. Tad, thank you so much for joining us today.

Well, thank you Chris. Look forward to speaking again soon.

Hey Chris here again. I hope you found this episode valuable. Now I have one more thing to gift you. We have a page for from my coaching clients where you can get a free copy of my book as well as much more from previous guests on the show. Just check out nextlevelincome.com coaching to get a free copy of my book, audiobook and much more. I'll send you a copy of my book and cover all the shipping costs as a thank you for listening to the podcast. Also, please like share and take just 90 seconds to give us a rating on Apple Podcasts.