ep 230:How to Invest Like an American Dynasty with Mark Miller

They're still getting good returns, but they're going to guarantee if something goes wrong, the economy collapses or we go into a great recession again, that you're not going to be sitting there going, oh my gosh, I've got to sit and wait five or six years for my money to get to even.

Welcome to the Next Level Income show where it's our goal to take your income, your investments and your life to the next level. I'm your host, Chris Larson. If you haven't yet, get a copy of our book for free at our website, Next Level Income.com. that's www.nextlevelincome.com. just click on the book link and I' even send you a copy if you put your address in. On today's show we have Mark Miller with Hilton Tax and Wealth Advisors. Yes, that Hilton. Mark has spent over 30 years in the tax and financial services industry helping his clients grow and protect their wealth. He has worked with hundreds of business owners, physicians, executives and high net worth clients, cutting their taxes significantly. He helps them grow and protect their business and retirement assets in good times and bad, plus preserve long lasting family legacies. And in today's episode, Mark and I are going to talk about the rules that the Hiltons have used to continue to grow their wealth in a generational fashion, how you can get a free copy of his book and learn more about how you and your family can take advantage of what's now called a multif family office. Mark, welcome to the show.

Well, thanks, Chris. Thanks for having me.

Yeah, we were chatting beforehand just about some of the things that Asheville's been through here recently. And I know you, you and your family frequent Asheville. And one of the popular attractions is the Biltmore. And I got some great news. Next week the Biltmore is going to open back up as of this recording date.

So that is good news.

Yeah, yeah, they're getting back up and running. A lot of the local restaurants are opening. But the reason I bring up the Biltmore is because oftentimes I've used this in my chapter in a children's book talking about the difference between what the Vanderbilts did and, and what families like the Rockefellers did. And I think the challenge is for a lot of, a lot of people, a lot of families that build wealth, they don't know how to maintain and you know, grow that into legacy wealth. And that's one of the reasons I'm so excited to have you on. Mark, you're going to share some of the secrets that the Hilton family has used and how you're enabling others to do that. Before we jump into that, I'd love for you to share a little bit about your background with our audience.

Sure. Well, I've been in a business financial consulting for, gosh, over 30 years now. I hate to say that, but that and I've. When I first started my career, I was kind of more on the retail side and the, you know, kind of looking in stocks and bonds and excited about that. But fortunately I over time I started getting relationships kind of on the what we call the institutional or the smart money side is what I talk about in my my book Hilton wealth, and started develop relationships there and started learn wealthiest of the wealthy do and stopped kind of, you know, hawking stocks and bonds and got more into kind of learning about the structure and how the wealthiest keep their money, maintain their money, and how they just get wealthier faster than kind of the average investor. And so in that space, I was fortunate to meet several of the Hilton family members. And that relationship just grew over a long period of time. And over the last several years, the Hiltons have invited me to come come on board. I'm now the manager of the Hilton family office, which it's like a lot of your listeners probably know what that is. It's when a bunch of wealthy people get together, kind of pool their resources, their assets, save money on investment investing, but also kind of give each other ideas and all of that on different things they can do to grow their wealth and a lot of very wealthy families. Then I kind of worked with Brad Hilton, who is the grandson of Conrad Hilton. We both had a passion, a real passion for bringing these advanced strategies more down to Main street and more down to the average investors. So we're working now and I'm very excited. The project we're working on called Hilton Tax and Wealth Advisors, where we can do that, and the book that we just launched called wealth how to Invest like an American Dynasty, is a product of that. And we've just been exploding and growing, teaching people these concepts, but also giving them access that they wouldn't normally have access to these really advanced strategies that generally only people that have 10 or $20 million can access.

No, I love that. And just just to kind of recap, Mark, you mentioned a lot of people know what a family office is. A lot of our listeners do. If you don't mind, just kind of review that one more time. And also the difference between a family office and something that's fairly new, a.

Multi family office yeah, so. So the original family office was actually started the Rockefellers, a long, long time ago. And what they, that's the family.

I use to contrast the V belts, by the way.

Oh really?

Yeah. And the Rockefeller rules and what they do.

Yeah, absolutely, you bet. And the, the Rockefellers though were kind of a little ahead of their time because actually what was happening is they were trying to solve a problem that a lot of wealthy families of that time, especially during the Gilded Age and you know, the Industrial revolution that were beginning so well, they were getting horrific advice because they had, you know, one advisor over here, other advisor area. I think it was Harry Truman that once said and made the joke that you know, hey, I've got these economic advisors, but. And they all say, hey, on one hand you can do this, but on the other hand you can do this. And he said, I just want a handed economist, okay, that would just tell me what to do. Well, that was, they had, they had a problem because they had all of this input. All of those people weren't talking to each other. All of them hated each other because they were competing against each other. And so finally the Rockefeller said, wait a second, why don't we design our own office where all of these and let's just hire these advisors to work just for us. And that's the family office came from. And by the way, when they did that, the Rockefellers doubled their wealth over about a five to six year period of time.

Wow.

So it, it breeds efficiency, it, it brings cost down. It just made and thing. The biggest thing that I found, the family office concept, it allows there to be a team concept and everybody talking to everybody in the different areas, whether it's insurances or investments or taxes or whatever, all of them are working together. So then over the years, what that morphed into was a multifamily office where not just one family was there, but there were other families that could come in and bring enough wealth and to where they could then all work together. That's also morphed into in the digital age, kind of a virtual family office, which is more of where we're getting. And the Hilton family office is kind of that way where when I, and I'm working on kind of transitioning into that, where we're bringing all the best advisors from, instead of being in one area, let's say Atlanta, where we're from, and getting the best advisors in Atlanta, we're getting the best advisor all over, not just the country, but the entire your world. Wow. To kind of pool together with us. So you've got best in class resources.

I love that.

So I hope that answers the question, but.

Oh yeah, that's fantastic. Thank you.

Yeah, that's kind of how the family office has morphed over the last, you know, 125 years or so.

Yeah. And I think we've seen that on several levels, Mark. You know, when with like our syndications that we started investing in and then you know, offering to investors here over the last decade and now you see that with crowdfunding and different things and these investments that used to only be the, the playground of, of the ultra wealthy have kind of trickled down. So it's kind of democratizing the, the ability to, to, to get to true wealth.

Yeah.

And kind of on that note, I always, you know, it's, it's interesting. Most ultra wealthy individuals or families, they make their money through either businesses or real estate. And I think if somebody's listening and doesn't know the Hilton brand, I don't know what I can, can do for you. But I guess if, and I will say I used to be a Hilton guy through kind of a company I used, I started working for about 10 years ago I switched to Marriott. So don't tell Brad that. But I guess he's fine.

He's fine. The hills don't have as much involvement in the day to day as they used to.

So yeah, they're good. But yeah, so Marriott, Hilton, you know those are, those are two of the biggest, Are they the two biggest hotel brands in the world?

Gosh, I would probably think so. I think Marriott is surpassed now.

Yeah.

But you know, many years ago Hilton was sold to Blackstone.

Yeah.

Which, and, and, and, and you know, I will tell you they're still Hilton and they're still darn good hotels, but not quite the same when Conrad and Baron ran that type of thing.

Well, names like Conrad and Baron, I don't know how you can't be wealthy. Those are two great names.

Yes, absolutely.

Mark, do you mind sharing a little bit about how the Hiltons built their wealth? I mean you have the hotel brand, real estate and what that has transitioned into. And then I'd like to talk about how the differences between how wealthy invest versus the average investor.

Yeah. And of course originally Conrad, the, the, the, the Hilton brand made some pretty bold moves when he was young and, and they turned out really good. A lot of persistence, a lot of just, you know, sure will, you know, made good moves and, and built the Hilton brand and then Barron actually took it to the Next level and really took Hilton, you know, to the stratosphere and made it worldwide and all of that. So originally they built their wealth that way. But what's about it is a lot of people don't know this, but the majority of all of Conrad's and Barron's wealth has gone to foundation, which is one of the biggest foundations in the entire world that gives away millions of dollars a year. And, and the majority of all their wealth did this. So. So the heirs did not inherit, you know, tons and tons of money. Obviously Baron made quite a bit of money on his own, built the Hilton brand more. But then other and other family members have done real estate also various other. Of course, everyone's heard of Paris and Paris actually a sweet, sweet person. And, and regardless of what people knew about her in her younger years, and she's a very, very smart business person and is very, very wealthy. And they all kind of learned these, you know, kind of secrets from different members of their families and how to build wealth and maintain wealth. One of the biggest things that they learned was, and what wealthy people do that, that people that don't have as much money and people that are more average investors don't do is safety and security more than they focus on just returns and making money.

Yes.

You know, hey, Warren Buffett's a good example of this. Warren Buffett is the majority of his portfolio is very, very safe and secure. We know him for Berkshire Hathaway. Berkshire Hathaway and the money that, you know, they put into businesses and the risk they take and all of that. But he takes a lot less risk than you think. The wealthy generally do that. That's why you don see the wealthy, all those, you know, 100 wealthiest people on the the Forbes list or the Fortune list fall off that list a whole lot because they're not risking massive amounts of money even though they continue to get richer and richer and richer. They have base portfolios, maybe 50, 60, 70% of their portfolio is pretty strong and is pretty safe. And then they're taking risk with about 30, you know, anywhere from 15 to 30% of it, which still allows them to get great returns, but assure that going to lose their wealth. And the Hiltons have been great at that over the years. And many of the Hilton family members have used these strategies, grow their wealth. And it's been very successful for them to be able to continue to grow it. Even though they did not start with Conrad giving them billions and billions of dollars, they've still been able to take some of these concepts and continue to grow their wealth over the generations.

That's, that's fantastic. And I think, you know, a lot of people have heard the expression shirt sleeves, the shirt sleeves in two generations or three generations as it would be. And that, that was because that, you know, those, it's not the money as we saw with the Vanderbilts, it's the lessons as you just articulated and you know, the education and how the wealthy think versus how those that are, you know, average or even, you know, even materially wealthy, you know, from a, from a profession, for instance. I'm sorry, go ahead.

Yeah, let me, well, let me just give you an example.

Yeah.

So on, on the retail side, and this is designed this way on purpose, Wall street can make fees off of retail investors. They want us to look at returns. That's all they want us to look at. They want to play on greed less on fear, although fear is in there too. But they want us to play on the greed that especially Americans have to make as much money as possible. That's why you'll see and still the biggest inflow of money on the retail side is into mutual funds. Well, how do they sell mutual funds? What see is, you'll see that tear sheet that says, here's the 1, 3, 5, 10 year performance, make your decision. Okay. Whereas the, the wealthy aren't going to look at that. I mean, there's this great story about we'll use Warren Buffett again. Years ago, going into this hotshot firm in Wall on Wall street that was making like, you know, 30% per year. And these guys were all these young people that were just up and comers and everything. And he and his group go in and this young guy starts in this presentation about all this money that Berkshire Hathaway is going to make if they hire them to do this. Da, da, da, da. And we're gonna make. He's going on and on and on. And about halfway into the presentation, Warren Buffett said, said, hold on a second, young man, hold on a second. You haven't said a word about how you're going to protect our money. And he just, the kid kind of froze and was like, oh, well, gosh, thinking that's not in the presentation. Yeah. And so I go back to is the first thing that the wealthiest people look at is how am I protected in this investment? Okay. And the funny thing is on the, on the, on the institutional, what we call the smart money side in, in the book Hilton wealth is on the smart money side. The first thing they're doing is they're making sure that they have a lot of opportunity to look at a lot of different things. And they're going to, they're just going to push aside those things where they're going to be just like in a naked position to where they could lose. If they put, you know, $50 million into an investment that they can lose it all tomorrow. That's not even for most wealthiest of the wealth, that's not even a consideration. Whereas on the retail side, people will do that all the, all day long. They'll see an advertisement on television for some real estate read or whatever and you know that 100% exposure and no, no backstop. But yet they're like, oh, they're gonna, they told me I'll make 14% per year.

Right.

Jump into that. Okay.

Yeah.

So a total different mindset and a different type of strategy that we're focused on and really the wealthiest are focused on.

Yeah, I think that's fantastic. And often we often talk about how our cash value, real estate is the base of our financial pyramid in our family, which, you know, that. Yeah, that's something that's really gone away. As you've talked about, Mark, when as mutual funds and you know, invest or buy term invest, the differences come to play. And most retail investors say, oh, okay, like what am I invested in? And they just think what percent stocks, what percent bonds? And then I'm going to get some term insurance. And that's, that's how we invest.

You got it.

How does that compare? You mentioned, you know, 50 to 70% of assets are typically more safe with the wealthy families. I know that, you know, kind of the, the research that we've done here at next level income has shown, you know, maybe 20 to 30% in stocks, maybe 20 to 30% in real estate. You know, then you have businesses, you have insurance, and you have other, these other things. What are you seeing? Are you a high income business owner or professional earning 2, 300,000 or even more a year, but still feel like you're living paycheck to paycheck? Are you comfortable working until you're 65 or 70 to retire, or do you want to achieve financial independence and live life on your own terms? You could join myself and Matt4 and learn how we both became financially independent in our early 30s. We will teach you how to make, keep and grow your money, teaching you strategies to maximize your earnings, keep your income that you've earned through tax strategy and legal structures, and ultimately teach you how to grow it by determining your personal investing strategy as well as teach you how to analyze investments so you can grow your passive income to the point to live life on your own terms. Our coaching clients reliably do this in seven years or less. To learn more, check out our coaching program at nextlevelincome.com forward/coaching. That's nextlevelincome.com forward slash coaching.

Well, it really depends every person. Okay. But we want to have at least a base, a foundational base that's pretty safe and secure. It doesn't have to be 100% guaranteed but that we've got good surety on that. On that base. And before I forget, I go back to your comment about really what you were talking earlier about is kind of the 6040 model, right?

Yeah.

Standard asset allocation model. By the way, that's totally and massively broken. It's been broken for 20 years. But that Wall street still uses it. Why do they use it? Because it's easy to sell the concept. Period.

Yeah.

End of story and broken. Because stocks and bonds don't work. They used to work absolutely inverse to each other. They don't do that anymore. There's been in the last look at 2022. Yeah, yeah. Oh absolutely. Absolutely. Really in the last 20 years there's been about four or five years where they've both gone down and up together.

Okay. So.

So that doesn't work anymore, but it sells. Okay. So our, our main tenant is we use what we call the true wealth portfolios where we have different wealth portfolio. True wealth portfolio, the Hilton true wealth portfolios. Then we talk about this in the book and by the way, and I've been talking about the book and we'll probably talk about this at the end. But I just want to interject if anybody wants just a free complimentary copy of that, they can Hilton wealth hiltonwealth.com and there'll be a pop up there. You can go to resources and order the book and get a compliment book on us.

Perfect.

Send it out to you.

What I'll do is I will make sure our team puts a link directly to the book as well in the show notes. So yeah, if you're, if you're watching, check out here below in the YouTube show notes or in the, in the show notes on, on, on your podcast as well.

So in that book we talk about the two portfolios. There's generally four buckets but it's a little bit different depending on the client and what they want. But generally we want a bucket that is very safe and very secure. It has maybe Guaranteed types of investments in. And we usually have six or seven of those types of investments in each one of our buckets at a given time. Just depends on what we have available. It depends on what the clients want. And maybe that's 100% guaranteed and maybe it's making 4 or 5 million 26% per year.

Okay, can we have some examples, I'm sorry Mark, can you give some examples of, of what that may look like?

Yeah, we might put structured notes in there. We might put different types of institutional based annuities that banks will use in their portfolios. We could use some U.S. treasuries or, or notes or bills in those depending on again the client, what they like, what they don't like and then what makes sense at the time. Okay, then we've got our, our second bucket is more guaranteed income bucket, which a lot of times we'll use some private equity firms that we've had experience with that will back up different types of income based investments for us and then we'll have plenty of liquid liquidity backing them up in their firms. We'll have first position spins to where something goes wrong. We get our money back plus our guaranteed interest. And those notes may play pay or those notes or those types of investments may pay, you know, 7, 8, 9, maybe 10% per year. It depends on what's available. Then we've got, then you've got your regular market equity based bucket which we use what we believe are the best money managers really in the world. Not just in the country, your local area, but really in the world that have some hedging involved. So we don't have a tremendous downside pressure on those portfolios. The Hiltons have used for years to not only guarantee great return, not guarantee, but I shouldn't use that word, but make sure that really good returns assurance that we're going to get good returns. But then we're not going to, you know, have years, we're going to be down 30 or 40 like you might be in a retail portfolio.

Yeah.

And then finally our last bucket is that private equity and alternative bucket where we'll generally have six or seven different types of alternatives available at any given time. Where we can invest in individual companies, we can invest individual type of private equity offerings, real estate offerings, things of that nature. So then you build a rounded out portfolio. But those last two buckets, we may only have a total of 30 or 40% of our entire portfolio in those two buckets. And the other two buckets we're going to have bigger Bigger percentage in there because they're still getting good returns, but they're going to guarantee if something goes wrong, the economy collapses or we go into a great recession again, that you're not going to be sitting there going, oh my gosh, I've got to sit and wait five or six years for my money to get to even to where it was before.

Yeah, absolutely. That makes, that makes great sense. And it's actually very similar to kind of the portfolio I built out for our family about 15 years ago. Kind of like four, four buckets, you know, 20, 25% somewhere around there. And doing that, we're always looking to learn and figure out what things are out.

Yeah. And the bucket concept is actually a little more of a retail concept. You know, you won't. With our, you know, the office folks. We don't necessarily talk about buckets and all of that.

Right.

It was our way and Brad and I's way to say, hey, let's take this concept that we really like. It's a retail concept about the buckets. And let's, let's figure out a way to say, hey, these advanced portfolios we have, how can it kind of fit into that concept so people can understand it? Really easy, simple, straightforward, gets the job done. How, how, how the, gets the job done of how the wealth of the wealthy would invest.

Yeah, no, I love that. And I think it is, it is inverse to what we see in the retail space, which is, oh, you're young, 90% in stocks, 10% in bonds. And you know, that's how a lot of people think. And then, oh, as I get older, I'll kind of peel that back and, you know, kind of take some risk away.

Not only that, but less fees than on the retail side. But more than that, I have a chapter on low volatility investing. It's a low volatility portfolio.

Yeah.

And statistically, if you go back to the best investment in the world, they're all low volatility investors. I would rather have. And the, the wealthiest, the wealth would rather have tiered type of real returns. Okay. And get more on the upside than deal with the big roller coaster swings. You're going to get better returns. Low volatility is always outperformed high volatility investment, which is basically how almost everybody on the retail side is investing in the, in the higher volatility type of portfolios.

Yeah, that's an excellent point. I think it's variance drag is the term, if I call it correctly. And I think the challenge is a lot of investors don't understand the difference between an average return and a geometric average return. You know, so, and it's, you know, a lot of people, you know, I've had this very, very simple concept, right? If you average, say a, you know, a 25 return over two years, but the first year, you know, you gain. What was it? What's it. It's going to be? I got trying to think here, you know, you, you make, make, you make 50 your first year, you lose 50% your second year. A lot of people don't realize that even though, you know, you average out a certain amount, that's not your actual return because you can end up back because you haven't.

Yeah. At one point you had half the amount of money.

Exactly, Absolutely. Yeah. So if you, yeah, if you, you know, if you increase your money 50, but then you lose half of that, you know, you're back down to 75%, even though the average would appear that you, you should be even.

And then our true wealth portfolios. Yeah, many of them depending on the percentages and how people want them to design, but many of them, some of our worst years, the portfolio is down maybe 3, 4, 5%.

Yeah.

But then that gives us the opportunity to keep that principle more intact. And then we don't have to get as massive returns on the upside to get better returns averaged out over time. And that's always. The wealthiest know this. That's always a better strategy. Plus, you're going to sleep better at night.

Yes, you know, absolutely. Absolutely. And you know, I kind of, I like to use this for younger people that are going out and finding jobs and different things. And I said, you know, hey, when you're young, yeah, you can take risk, but what if you put together a plan so you had a high degree of financial certainty or security or even financial independence by the time you were 30 or 35 or even 40. Well, if you don't have to work anymore by the time you're 35 or 40, how much risk can you then take? And to your point, Mark, you're kind of saying, hey, let's put in place the first few steps, the first few buckets, the first few tiers, so that we know we're going to be taken care of with these, guaranteed. Then you can layer in some equities, you can layer in some private equity or businesses, and higher risk, higher return. I know we were talking about crypto, which I'm happy to let you kind of expand upon, but if that's only 5, 10, even 20%, of your portfolio. You can take a lot of risk. And even if you lost it all somehow, you're still, you're still, as you said, you know, even in a really bad year, maybe only down a few percent.

Yeah, absolutely. That's exactly, that's the best way to invest. And it took me a while to learn that myself, but I had to get exposure to, you know, kind of a trust side of the business. And a lot of these people like Northern Trust and getting introduced to a lot of wealthy people to realize that's a, a much better way, it's a much more productive way to invest your money. The wealthy will also apply, generally apply these strategies to their businesses too. That's why their businesses tend to, they tend to build big, big businesses that continue to grow and grow and grow. Obviously, first and foremost, as many of the wealthy people, they've hit upon things that the public really need or there's a service, something that is highly sought after in the marketplace. But you know, the, the, the American landscape riddled with people that do this and it is needed in the marketplace. But they can't sustain their companies long term because they haven't built that proper foundation of safety and security that if something goes wrong, then you've got a backstop, you've got the ability and it buys you time to shift and alter strategies to continue to grow your business or in this case we're talking about, it's going to grow your portfolio.

I love that. So, Mark, I'm a fan of everything you've talked about. I've gotten a chance to kind of go through your book, but haven't read Reddit front to back, which I already have it downloaded and ready to do. So again, remind listeners how they can get a copy of Hilton wealth how to Invest like an American Dynasty and also they want to learn more about what you do at Hilton Wealth Advisors. I'm sorry, Hilton Tax and Wealth Advisors. How best to get in touch with you all?

Well, simply they can go to hiltonwealth.com hiltonwealth.com and on our website is everything you need to know about our company. And they can order the books too and get in contact with us that way. And I am happy to, to even personally meet with, with any, any of your folks that are on here if you've got questions or would like to have a little bit of a wealth strategy meeting, we'll sit, sit down with you, talk with you for, you know, 20, 30 minutes and see if there be a mutual fit and see if we can help you.

Perfect. Mark, this has been an enjoyable conversation. Thank you so much for sharing. You know, some of these, these tips, tricks and really, you know, these, these rules that as we were talking about the Rockefellers, the Hiltons and some of the most wealthy families use not only to build wealth but also create that legacy and that generational wealth that a lot of our listeners are looking for.

Absolutely fantastic, Chris, and I sure appreciate you having me on today.

Been my pleasure. Thank you so much.

Thank you.

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 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.