CFP Presentation: Making an Impact Through Cultural Empathy and Execution in Financial Planning

Ladies and gentlemen, please welcome to the stage CFP board member and CEO and founder of International Private Wealth Advisors and Business Management Lab, Luis Barajas.

Thank you everyone. I am going to talk to you over the next 15, 20 minutes over making an impact cultural empathy and execution and I want to share with you a little bit about my story. So born and raised in Boyle Heights, which is an enclave of East Los Angeles. It's a barrio. The reason why I put barrio here because a lot of people don't know what a barrio is. And so grew up in the 60s and 70s, one of the most gang infested places in the United States. At the time when I was living there, 60% of all the Latinos in East LA were unbanked, meaning no checking, no savings. 60% of the kids from the high schools, which was Garfield and Roosevelt High School were dropping out. I was very fortunate to make it out because I had very loving people around me. I had a grandmother who raised me with my mom. My mom got pregnant with me at age 15 and my dad had a sixth grade education and started an ornamental iron shop in East Los Angeles when I was 11 years old. And being the eldest and the only one who spoke English, as you guys know, you're the translator and you become the accountant. And I swear to you that at age 13, I was also my dad's tax repairer because the IRS showed up to my dad's shop and said that my dad had not filed taxes. So my dad had to drive me like 15 miles out to buy a book on how to prepare taxes at the age of when I was 13. So.

And just so you guys know, as of last night, there is no bookstore in East Los Angeles, one of the most highly dense Latino areas in the United States. But because of my dad, I wanted to help my family out. I ended up studying being a bookworm. I had an uncle who was a professor in Mexico, but he, because he was undocumented, was working as a meat cutter in East LA and would buy me books all the time. So I ended up going to UCLA and graduated. Then I went to Claremont Graduate School and I got my mba, studied there when Peter Drucker was there. That's how old I am. And became a financial. Well, I had a friend that was in grad school who says, you know, you'd be a great financial planner. So I want to learn everything about stocks and bonds and money because I really don't have an experience on that. So I started the Denver College of Financial Planning back in the late 80s and got my CFP, ended up working as a financial planner. But I really, my love was my community. And when I couldn't sell product, I, um, they asked me if I could sell maybe annuities, which would be good for them and, and me as well, to put them in cash. But what I was doing is I was taking people by the hand and I was walking them across the street to bank of America and helping them open up checking accounts and savings accounts. And I wanted to because I was taught as a financial planner, you do emergency reserves, you do life insurance, everything else. And so I very got to be quite honest with you, the word is probably harsh, but it was true. I got disgusted about the financial planning profession and I left. I didn't want to do that. I didn't want to be somebody who was creating more problems in my community. So I went to go get my CPA license and I didn't really have an accounting degree, had a finance degree. And I just fortunate enough that I ended up at a firm in Orange County, California called Kenneth Leventhal. And our clients back then were Donald Bren of the Irvine Company. Donald Trump was a client. This is back in the late 80s when, at, when a lot of the real estate developers were losing their shirts. I think Donald Trump was going under. We were helping renegotiate the debt. And some of you are old enough, you remember back then that Charles Keating sold a lot of money from a lot of people. Savings and loans were going under. So I worked on those little high profile cases. And, and so what happened was in 1990, my entire life changed. I'm working on these high profile cases. My grandmother calls me, says she's not feeling well, and she ends up dying from complications of a heart attack. 4 foot 8, size 2 shoe, love of my life went to go see her every week, whether it was at UCLA or grad school. She was like my mom to me as well as my mom, but I loved her to death. And then my uncle, who was her eldest son, my godfather, ends up committing suicide two weeks later. And then I was working in Phoenix on the Keating case and my wife calls me and she says, I'm going to Hogue Hospital, I'm giving birth to our daughter. My, my wife is expected to have. We were excited to have a baby within five to six weeks, but because of all the trauma and everything that was going on, she gave birth a couple weeks early. And so I have my grandmother who passes away, I do the eulogy, my uncle commits suicide, I do the Eulogy. And then I fly back within an hour back to Orange county on a Friday wearing a suit. And I go straight to the hospital. We give my wife gives birth to our daughter Alexa at 2 o' clock in the morning, 3 o' clock in the morning. And then she says, can you go to the house? I forgot some stuff to pick it up. I go to the house, I pick up the stuff, I take a shower, hadn't eaten and it was already around 6:30, 7:00 in the morning. And I stopped off at a coffee shop called the Renaissance Cafe in Lake Forest, California, in Orange County. It's called Lake Forest, California. And I had a cup of coffee, I had a bagel, I hadn't eaten 24 hours. I was putting cream cheese on the bagel and some gentleman in a Hawaiian shirt comes over to me and he says, do you mind if I sit next to you? And I said, listen, I'm going to be gone in about, you know, 15, 20 seconds. Let me just put the cream cheese on the bagel. My seat has a cushion on it. You can have my seat. I just had a baby. I have to rush to the hospital. Well, he thinks that something's happened to my baby. I just want to get back to see my daughter. And he puts his hand on my shoulders and he has like a 30 minute, 45 minute hour conversation with me. I don't even remember, I really don't remember how long the conversation was.

I go back to the hospital, my parents show up a couple hours later and my dad, who had an ornamental iron shop in east la, says, well, he comes to me and he goes, how's everything going? I said, dad, I just met a man who just changed my life. I'm going to quit my job on Monday. I'm going to go back to the bathroom, I'm going to go help our community. Now you have to understand, I'm going to take you to the time period. It was 1990. It was on September 8, 1990. There was no Internet and no financial literacy. No Latinos are unbanked, high dropout rates. And my dad had bought this piece of land where there was a restaurant called Boca da Rio that he leased out and there was two apartments above and his shop was in the back. And those two apartments, for the first time in like a decade had. And Nancy, my dad said, we'll convert those apartments into your office and you can grow into it. And just so you can pay me rent whenever you have start making money. And without telling my wife on Monday I went to the office and I gave notice. They actually had three months of PTO paid time off, and they said, don't quit. We know that you're going through a lot of trauma. You're going to go back. You're not going to. You won't last. You'll be back here. So don't even quit. You know, give us a notice in three months. Well, that was in 1990. Today's 2024. Right. I never. I never went back to work. So I've been in the community helping people. Obviously, we've grown. We now help a lot of other people. But I've had some really deep learning experiences working in the barrio. So I wasn't doing pro bono work. I was in the barrio doing the work there. And I was there in the barrio for 15 years. And so what I learned was that all the education brainwashed me to think a certain way. It brainwashed me to think about. And we'll go through it right now about how America thought about financial planning and what cash reserves were and what financial planning was, what education planning was. So when I went back to the barrio, because I thought that I can give them financial literacy and teach them the way out of the barrio, the community taught me a lesson. And so I wanted to share with you what lessons I learned. So I learned that Latinos don't have sweet 16 parties. They have quinceaneras. But in areas of poverty where no one is saving for their kids to go to college, no one is saving for retirement, the parents are pawning their wedding rings to have a birthday party for little girls who are 15 that are, you know, back then were $5,000, which today would be like $20,000. And I was told by the CFP, they're saying, oh, no, that you got to get them. You have to convince them not to do that. You have to convince them to start saving for college education. That's going to get them out into the. And educated and out of the barrio.

And I couldn't change anything because it was so enculturated. It was so important for the families. It was so important for the grandma. But I had to think of different ways to attack that problem. We have issues like superstitions. Anybody who's Latina here. Latina. Well, we all know, like, for example, superstitions. You know, most women will not leave. Latina women do not ever, ever, ever put a purse on a floor. Why?

You lose your money. I've been told that the money will run away or el diablo will the the devil will take your money. When you hear a dog in the, in, in my, in my neighborhood, how somebody just died. Well, most of the time the dogs, how, when you hear the ambulance. So probably somebody's dying, right? Or somebody's sick. But you know.

I couldn't get anyone to. Even if they had a little bit or if they had bata casita their home, I couldn't get them to do an estate plan. Because why? Because the very first thing with the estate plan, the superstitions, if you do un testamento in Mexico, they don't do trust, they do testamentos, which are wills. They you'll die within like a certain time period. Well, because what happens, most people are doing testamentos, right? When they're in their deathbed because they wait so long to get them done.

Superstitions stuff that I had to think about family, all right, Retirement. So right now, as of today, in my wife's house.

There'S my in laws.

Her brother, her sister, her grown up children, and then my grand nieces and nephews, their grandchildren, like what, four? And in East Los Angeles, when there's not a lot of money, people will end up buying like the whole family will put together and buy a property together and they'll live in it for generations and they don't ever have to pay down the house. So they eventually pay down the house, but there's people paying for it. But I grew up where all my friends were telling me, all my Anglo friends were saying, oh, at the age of 18, my parents are kicking us out because we had to be independent. So when I'm thinking about saving money for retirement or saving money, what do you mean? What are you talking about? We're going to be here, we'll be fine. We are. Every generation can have sort of offsets. That's the kind of the Social Security, besides their Social Security.

But I said, no, you have to be independent. The kids, you got to get them out, you got to get them to college, go away. And then they'd still come back. And they're all educated, by the way.

And I fought that because I remember I went to ucla, I got my MBA at Claremont Graduate School, I studied at Denver College of Financial Planning. That I was, I was taught a different way that didn't match and I couldn't. So I go back to the barrio and I can't change anyone. Everything that had been taught on financial plan, I just can't change it. Faith. Every single time I would talk to somebody about doing a long term financial plan, they Would say, yeah, you know, if God wills primero Dios.

People laughing. I know they're Latinos because they understand primero dios, you know, it's God's will, you know, what do you mean? We're doing a plan. It's like, you know, I'm going to do if we live day to day, right? Delayed gratification. So now I think I'm this badass guy from Newport beach with a cfp, with an MBA going back, and I can't change anybody. And then I realized, and I read this book, I read this book by Elaine Olin called Pound foolish back in 2013-14. And prior to that I had an inkling, a feeling of like she said in her book that Elaine Olin, if you haven't read the book, Pound Foolish was the LA Times makeover, financial makeover person. And she said she had put all these people together with some of the best financial planners in Los Angeles. And then she went back and did a study, longitudinal study, to see how their lives had changed. He said most of them, none of their lives had changed. She said that only like 11% of the people that ever work with some of the best financial planners in the in Los Angeles ever executed their plan. And then I realized that financial planning was not what I needed to do. If you go to my website, on the IPWA website, you see I'm a financial doer, and in this community, I had to hold their hand and I had to do. We basically started doing the work. So we would give them advice, but then they would never follow up. So we just said right there and then it's like, if you need an estate plan, I'll give you an example right now how we do it. But we call the estate planning attorney, we sit down with them, we're in the meeting, we're having conversations with them until it gets done and executed. And we double check that the county recorder funded the property, if they had a property. So execution is everything. So the, the empathy is when I started to realize I'm not stepping in their shoes. And even when I was in their shoes, I forgot about where I came from. I went back and I realized that that culture was beautiful, whatever, but there was still poverty. And that's not the beauty of working in that type of community.

So I'll give you an example. One of the questions that every client, when they come to me, you know, family is the number one value with Latinos. Faith and family. Family first sitting down, husband, wife, we have a conversation. He's working she's staying home, taking care of two or three kids. I go, you guys need life insurance. You need it. It's not a want, but I would never get them to buy it. Why I would ask them, sir, but hold on a second. You came here because you want me to help you with your financial planning and take care of your family?

And he goes, yeah, but you need life insurance. Yeah, we'll talk about it later. I said, but on a scale of 1 to 10, how much do you love your wife? An 11. On a scale of 1 to 10, how much do you love your children? An 11. Okay, so we need life insurance. Well, let me think about it. And then the best consultant, better than Michael Kitces is my father. And he comes to me and says, dad, what am I doing wrong? What have I forgotten? And he says, pendejo dummy. He says, you forgot that Latino men, if you have young families, they think that if they buy life insurance, the Sancho, the other guy, the new guy coming in, is going to end up with the money.

Colombian. So Mexicans call it the Sancho. Colombians call it Ricardo. Different cultures call it different things. And so then I would say, so, hey, between you and I, you know, the elephant in the room. Are you worried about El Sancho? Oh, yeah. How'd you know?

You see my wife, she's really beautiful. So, no, babe, you know, I'm never going to get married. She's like 20 something. I'm never going to get married. Well, no, you are going to get married. I said, what if I can show you a way that we can do this trust called the Navy Trust, where half of the money, the. The life insurance policy goes to your wife, the other half goes to the kids if she remarries. That money's for your kids. We can do that.

I've never not sold a life insurance policy for somebody who needed it. Because we talk about the Sancho, and those are the things that, that.

That we have to be culturally sensitive and there's empathy. And that's why I push so hard for. We have all this diversity coming in. We have kids who are not wanting to work with multi millionaire clients. They want to work in their communities in Chicago, in the east side of Phoenix, in El Castle, Texas.

And they want to come here, but again, is they forget where they came from and then they realize that they can implement because nothing changes without. Nothing. Nothing changes without execution. Advice doesn't matter. We have to be financial jewers for certain communities. So there is a lot of handholding when it comes if you're working in communities of color, in communities of poverty, there's a tremendous amount of handholding. But you have to do the handholding and you have to see everything all the way through. Because if people leave, they're not going to change their lives. You're not going to change any kind of issues. Now do I still have my children, my family, Angie's family, in their house, the five generations? Yes. Do all they have a retirement plan? Yes. Is there an estate plan? Yes. Is there life insurance? Yes. But they choose to be together. They choose it. The quinceanera. I now sit down and I said, okay, the quinceanera is really important, but let's talk about everything else that's going to happen. What are some life defining moments that you would like to help your daughter with? Well, I'd like to help them with that. I'd like to help them a little bit with college. I'd like to help them that if when they go to college, maybe a little used car, I'd like to one day help them a little bit if they get married. This is great. So let's put a plan together with all of these. So instead of spending now in this, these days, 30 to $40,000 on the quinceanera, they're still spending money, but they figure out how to spend maybe half of it because now we have money going into the other goals. But I never denied them what was important for them, ever.

And they implement and there's change.

And then there's empathy. Plus execution is an impact. And that's all we want to do in financial planning, is to create an impact in people's lives. Thank you very much for your time.