Jason Hartman starts the show by sharing the lessons he learned from Tony Robbin. In the interview segment, he talks to Bobby Monks, former chairman of Spinnaker Trust and author of Uninvested: How Wall Street Hijacks Your Money and How to Fight Back. He breaks down the elements of kickback fees in retirement accounts and answers if Wall Street is systemically corrupt. Jason and Bobby also talk about FINRA and why real estate is a better investment than the money market.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:12
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:02
Welcome to the creating wealth show, Episode Number 608608. Thank you so much for joining me, this is your host, Jason Hartman. And today we will be talking about uninvested with Bobby monks, and we’re going to talk about Wall Street. And some interesting stuff there, how they hijack our money and how to fight back should be good discussion with him. So that’ll be coming up in a moment. But first, gosh, I am back in town here back to San Diego flew from Fort Lauderdale all the way to San Diego last night. And it was the longest trip ever. Not that that’s such a long trip. I knew you know, we do this regularly fly across the country. No big deal. But Coco, Coco Hartman, my dog, daughter, aka daughter, came with me. And that was her longest flight so far. And she did great. So that’s good. Gosh, the Tony Robbins event, just still thinking about that still want to talk to you about that a little more after I digested? But you know what one of the big takeaways in this is not new. I remember thinking about this many, many years ago. But what questions are we asking ourselves? And those questions really determine the quality of our life. I remember Tony talking about this many years ago, and he talked about Albert Einstein and how Einstein asked himself different questions than other people were asking themselves. And really, you know, I’ve always taught sales people. Over the years when I had a traditional real estate firm, you know, I had a batch of over 60 salespeople that I was training constantly, every week. And I always would say, you know, the person asking the questions, is the person who is leading the conversation, and I’m sure you would agree that that’s true.
Jason Hartman 2:55
But think of this in the realm of self talk. Right? You know, we’re all talking to ourselves all day long, we are talking to ourselves constantly. And this mostly isn’t out loud yet. Maybe for some of us it is. But when we talk to ourself, we’re asking questions of ourselves all the time. You know, we’re asking questions like, how could they do that? That, you know, how could someone be so evil? How could someone be so dishonest? How can someone totally lack integrity? How could someone show up late? How could someone not keep their promise? How could someone you know, take advantage of me like that? How come there’s never enough time to do anything? How come the day goes by and I feel like I didn’t get anything done? How come I can’t get enough sleep? How come I’m not eating? Right? You know, what do the answers to these questions? What do they cause? What do they lead us to believe in our life? Well, those questions, they determine the direction we go, right? Because we all naturally want to answer the question. And so one of the exercises that Tony had us do is explore what our primary question is the primary question of our lives. And in so doing that, once we discover our primary question, you know, that the sort of now we have many questions, of course, and I just gave you an example of some of them. But when we ask, when we figure out, you know, what, maybe that number one primary question is that that, you know, we’re always answering, and the answer to that determines the direction of our lives.
And then if we change the primary question and decide on a new primary question, so I just thought of those examples. I just gave you off the top of my head, but You know, we could ask ourselves a different question. And that will determine a whole different attitude. Maybe we can ask ourselves a question that makes us grateful, and makes us appreciate things and what we have, like one of mine was, you know, I’m constantly feel like, I’m in this battle with time. And certainly, a lot of this is my own fault. Because I’m constantly taking on new things and more things. And I don’t know why I do this to myself, but I just, I don’t know, I just kind of liked it, I guess. And in doing so, you know, it feels like time is always scarce to me. And sometimes I think, you know, why am I doing all this stuff? I’ve already made it financially, at least most people would probably consider that I have. It’s not like I spend all this money. You know, it’s not like I live some lavish lifestyle, going out and, you know, fly in epic first class all over the world, and going out to the fanciest restaurants and the fanciest nightclubs and getting, you know, bottle service and the prime table, and, you know, all of this kind of stuff. I don’t even like to drink. Okay, hardly. I mean, I, it’s amazing how my alcohol consumption has just dramatically reduced in the past several years. And I think that’s probably a good thing. Lest we get off on a tangent. Right.
But you know, my question I, I think this is, like, one of my real primary questions in life is why isn’t there enough time to get everything done? But you know, you can also ask yourself another question like, Why? Well, gosh, what was mine? I can’t remember my primary question. I wrote it down. But I don’t have my workbook handy. See, you got to remember this stuff, obviously. But you know, that maybe Oh, yeah, the primary question, the new primary question that I came up with was something like this. How can I be grateful for and enjoy every moment of life? So you see how different that is, in my mind will answer my mind’s question. You know, it’s like, we have two personalities in our head going on and on I and I know, I’m not the only one. We all are wired this way. We all have the same thing. So we have this debate committee that is always debating these things. And you know, one side of the committee is ants asking the question, and another side is answering the question. So if my question to myself, and maybe you have this question, or whatever your question is, you know, maybe maybe, for many of us, I mean, look at gluttonous America, right. You know, how come I can’t lose weight? How come? I can’t eat? Right? You know, what, if you ask yourself a different question, what if you said, something? Now, I can’t think of this off the top of my head? Look, I’m not Tony. Okay. But you know, what have you asked yourself the question of, isn’t it amazing? And this is formed as a question. Isn’t it amazing? How plentiful, great healthy food is? You know, so if you ask yourself that question, what are you going to find? What are you going to focus on? Right, you’re going to focus on all this great healthy food and all these great options out there, rather than Why can’t I lose weight? You know, or, you know, why am I always struggling with my finances? versus Why do I have so much compared to two thirds of the world that by the way, I’ll remind you, we’ve talked about this before in the show lives on only $2 a day.
Okay. So that question, we those questions, we asked ourselves, determine a heck of a lot about the quality of our lives. So just think today? What question are you asking yourself? And what are some of the answers to that question? And then, how about formulating a new question? And think of some of the answers to that new question, and think of how much better that new question could serve you? Okay. So, you know, that’s another one of the lessons I got from the past six days with Tony Robbins. It was really cool. We were fortunate enough to get a picture with Tony and his wife. Actually, Coco is in the picture, too. So, so I I think that might be the first time someone’s dog got a picture with Tony, maybe, you know, so. Oh, I’ll probably stick that on my Facebook page here soon. And the Facebook page, of course, is Jason hartman.com. So you go to facebook.com slash Jason hartman.com for the company page, and you’ll see that there probably later this week, I’ll get it posted. Anyway, yeah, a lot of good stuff coming out of that.
Boy, we got two more people interested today. They were asking me if they can come as a Guests to our soon to be upcoming awesome Dubai trip. And yes, you can. So think about that airfare is incredibly reasonable on Emirates one of the best airlines on planet Earth. It’s amazing. Can’t wait to fly it myself, it’ll be my first time. So go to venture Alliance mastermind.com. That’s venture Alliance mastermind.com. Check out some details about the Dubai trip coming up in February, meet the Masters is totally sold out. So no more tickets available for that. That’s in January. But we’re looking forward to seeing all of you there. We also decided to do a little charity fundraiser. And we sold just a few tickets to the VIP dinner on Friday night. And thank you so much for your support. They sold instantly. I mean, just I couldn’t believe it, you know, we actually oversold them because two people didn’t get in fast enough. And they said, Well, I don’t for some reason, I had some problem registering. So anyway, we, we we oversold that by a little bit, but no big deal. Thank you for your support. And that will go to a good cause. I think we’re just gonna donate that money to the Anthony Robbins foundation. You know, they’re they’re doing some good work. And they got a four star rating on charity nav. Is that what it’s called, or now now star anyway, whatever the website is that, you know, kind of like monitors and publishes the financials and the work that charities are doing. So anyway, that one’s as good as any, they do some great work, and we’ll donate that money to the Anthony Robbins foundation. So thank you for your support of that. We look forward to seeing you at the VIP dinner on Friday night. We may have an organized group dinner on Saturday evening as well. We’re working on that more details upcoming on that one. And we’re just looking forward to seeing you at meet the masters. It’s just a few weeks away. So it’s going to be it’s going to be great. And, you know, let’s get to our guests. Without further ado, I think you’re gonna enjoy this interview with Bobby monks. So here we go.
It’s my pleasure to welcome Bobby monks to the show. He is the former chairman of Spinnaker trust and institutional shareholder services. He’s author of Uninvested how Wall Street hijacks your money, and how to fight back. You know me, I think Wall Street’s the modern version of organized crime. Bobby, welcome. How are you?
Bobby Monks 12:26
Very well, and thanks for having me on the show.
Jason Hartman 12:28
Yeah, it’s good to have you. First of all, you have a bit of a unique background coming at this. I mean, are you a wall street guy or not?
Bobby Monks 12:37
Well, I would say I am in part, I have been all around the investment process. As as you mentioned, earlier, I was I was chairman of a Trust Company. I’ve been founder of a bank. And I was chairman of institutional shareholder services. I’ve also been a I’m also a real estate developer and an entrepreneur. So I’ve had private equity Invest in me, and I’ve invested in private equity. So I’ve really looked at this from the perspective of an insider. And that process was very illuminating, because it as it’s evolved over the last 10 to 15 years, it made me more and more concerned for the average investor.
Jason Hartman 13:18
You know, a lot of people have just totally lost faith in Wall Street, you first of all, talk to us about the problem, you say that it’s a systemic problem. And by the way, I should mention, you know, I have a lot of Wall Street, Wall Street people on the show a lot of Wall Street, you know, related people in some way. You know, I constantly say that, you know, Wall Street’s the modern version of organized crime, and they kind of laugh about it. And, and you know, what, interestingly, though, I would you would think they’d be offended it me saying that, but they actually just agree. Or at least they pretend to agree. And you seem to agree to what’s going on systemically, here? I mean, I know there are a lot of good individual people that work on Wall Street, but the system just is this systemically corrupt?
Bobby Monks 14:03
Well, I think it really is. And I think, let me just tell you a couple of facts. First of all, 90% of financial advisors don’t have to put the interest of their clients first. So that means they can sell them products that that really aren’t in their best interest that are really more in the interest of the person who’s selling the product. I’m sure that you’ve heard about all the fees that are charged. And the problem with those fees is they’re multi layered. They’re often undisclosed. And they’re often layered. The average fee for a 401k is over two and a half percent. So over a long period of time, say a retirement process of 30 years that can add up to a tremendous amount of money. In a you know, one of the principal elements of this is is is your money manager involved. In the same things that they’re putting you in, and if they aren’t, how come? And is the it’s also the only industry that I know where you get paid if even if you lose somebody money. So there are there are a lot of what I would say is forms of legal larceny, that are really very, very detrimental to, especially retirees. And that over a period of time, these retirees going to end up in a situation where they’re not going to have enough money to retire.
Jason Hartman 15:35
That is a sad, sad state of affairs, isn’t it? This systemic problem. Did you really say what that is? I mean, did you did you get to the heart of it when you just spoke about it?
Bobby Monks 15:47
Well, I mean, again, there’s little nuggets, give you a couple of examples of where there’s legal larceny. There are fees that are in mutual funds called 12. b, one fees. And those fees are about point two 5%. That is charged to the mutual fund investors for essentially marketing the mutual fund to brokers. But the mutual fund doesn’t have to disclose that fee. So they they can say that there are there are, you know, zero fees for mutual fund. But in fact, they’re charging the client point two 5%. There’s another element called revenue sharing, which which happens a great deal with 401 K’s where the mutual fund actually pays the administrator to get on the menu of the 401 K. So the administrator, rather than doing what’s good for the employee is getting paid to do something that’s good for the mutual fund. Even if that mutual fund isn’t appropriate for the employer, then they’re soft dollars, which is essentially just a kickback scheme. So there are there are multi areas here where the average investor is systematically to take an advantage of.
Jason Hartman 17:10
This is just unbelievable. So in other words, you know, if you go hire a real estate agent, theoretically, I’m not saying it works in practice, but they have a fiduciary obligation to you as the client. That’s the highest level of obligation. It’s not just a good faith and fair dealings obligation. It’s a fiduciary, not saying that it doesn’t work out and pray that it works out in practice that way, by any means. But at least that’s what what it’s supposed to be right. But like in Wall Street, and this wall street related stuff that you were mentioning, they don’t even put that window dressing on there, right?
Bobby Monks 17:47
It’s absolute legal larceny. It’s unbelievable. Jason, I mean, I think it’s it. And unfortunately, you know, you have, you know, if you look at your average investor, someone who’s contributing with 401k, you know, they work hard all day, they’re ringing up a family, they’re, you know, life can be overwhelming, they don’t really have the time to be able to talk to their investor in a way that ultimately would illuminate to them. What’s going on? So you, so you have a system to the average investor, that feels very overwhelming, and it feels incredibly complex. And so that they, a lot of the times Wall Street uses that sense of being overwhelmed. And that sense of complexity to essentially intimidate the average investor, which is I think, very, very unfortunate.
Jason Hartman 18:39
Yeah. Wow. It’s just something else. Well, okay. So, is there anything investors can do about this?
Bobby Monks 18:46
Well, yes, I think there’s a number of things that investors can do. And I think some of the good news is that you’re you’re really looking at fees going down. Because both institutional and individual investors are starting to wake up and say, Well, look, we don’t want to be taken advantage of anymore. So what you can do, if you and I’ve outlined it in my book is essentially contact your your investment advisor, whoever that may be, and ask them a series of questions. And those questions are, do you have to put my interest first? What are all the fees that I am charged? And I want the fees that that are disclosed and those fees that are undisclosed?
Jason Hartman 19:35
So wouldn’t they just the first thing I would think is, you know, first of all, we got it, we got to make sure people understand that. We’re only getting past the investment advisor, which is only one layer in peeling back the proverbial onion here, right?
Bobby Monks 19:53
That’s correct.
Jason Hartman 19:54
And I’m glad you agree with that. But you know, wouldn’t it be Bobby though that why don’t they just don’t they just lie to you? You know, when you ask him these questions, you know,
Bobby Monks 20:03
Well, you know, again, I think the important thing is to ask the series of questions that I’ve articulated in the book. And if you’re not comfortable with that answer, then you can go next door. And you should ask the next guy until you’re, you’re comfortable with the process. It is, it is, it is a, it take a little bit of time. But I tell you, it’s the most valuable time that you can spend, well, let me give you let me just give you a figure here, if you were to invest $25,000 with an average return of 7%, over 35 years, 1% would cost you $65,000. Okay, if the average 401k is charging you two and a half percent, then think how much money that is over a period of time. So if you’re the average employee, employer, it makes sense for you financially, to go talk to whoever the company has for a financial advisor, and ask them the questions before you invest in the 401k. What are the fees? I’m being charged? And if they can’t answer that question into a way that you’re comfortable, then I wouldn’t invest in that. 401k.
Jason Hartman 21:13
Yeah. Okay. Interesting.
Bobby Monks 21:15
Well, and again, I mean, I think you, you, you, you’ve seen it in the institutional market for a long time. I mean, finally, the institutional market is starting to wake up. And and, you know, CalPERS is a perfect example of that, where they were charged billions of fees that were just totally inappropriate. And so I think that the average investor can take a page out of the institutional investors book and begin to negotiate with their money managers.
Jason Hartman 21:42
Okay, so you’re talking about two kind of different things here. Some people that just want to go and find an investment advisor directly, they just walk into Ameriprise or Merrill Lynch, or one of these companies and others who are working in a company who have a 401k plan. Right. And basically, they’re both getting ripped off probably.
Bobby Monks 22:04
That’s correct.
Jason Hartman 22;05
Right? Yeah. So I just want to distinguish between those two. But the 401k manager, you talked earlier about how they don’t they can just outright do things that are intentionally not in the investors best interest, right?
Bobby Monks 22:22
That’s correct. So they can’t do that. And it gets all perfectly legal. But it is a just because of legal doesn’t make it right. And it doesn’t make it good for investors. Essentially, you know, what the the mutual fund industry has done as it relates to 401k is just continually find new ways in which to vacuum up fees from their from the clients. And this what is really interesting is I think I mentioned to you earlier is the Department of Labor is is now trying to change that. And they’re trying to heighten the fiduciary responsibility of the anybody who manages a retirement account and the heightened fiduciary responsibility would be that they had to put the best interests of the clients first. And once you have to put the best interests first, then a lot of what I call legal larceny, then goes away.
Jason Hartman 23:21
Yeah, right. Okay. So So what do people do about that, though? I mean, that’s not anything. Anybody can control. You’re just talking about the law. Right?
Bobby Monks 23:30
Yeah. Right now? Well, the what’s interesting about this is the only person that has to ultimately make the decision is the president united states. And so it, it seems like this law is actually going to go through this ruling is going to go through, there are some shortfalls, you know, there, the industry lobbied back to try to prevent this from happening and have a series of carve outs which aren’t very good. But I think this will make some, some baby steps in terms of beginning to make it a little bit better for investors. I think one of the things that’s very interesting about this is that FINRA, are you familiar with FINRA?
Jason Hartman 24:09
Oh, sure I am. Yeah. And tell tell the listeners all about FINRA though.
Bobby Monks 24:11
Well, FINRA is the organization
Jason Hartman 24:14
Supposed to protect the consumer,
Bobby Monks 24:16
Right. Supposed to protect the consumer from Wall Street, and it’s actually paid for by wall street. So, you know, rather than being a watchdog, my guess is it’s more of a lap dog. And interestingly, FINRA has come out against this ruling. So so here’s this organization that’s paid for by wall street that’s supposed to protect consumers that is coming out against a Department of Labor ruling that it wants to essentially put the best interests of the client first. It’s unbelievable to me.
Jason Hartman 24:49
So you mean unbelievable in a good way. Right?
Bobby Monks 24:51
Well, it’s unbelievable that FINRA is coming out against the DOL ruling. That you know, because I
Jason Hartman 24:58
Oh. So the Department of Labor That’s the DOL by right. So wait, what did the Department of Labor say? Just to make sure we’re clear on that.
Bobby Monks 25:06
Well, the Department of Labor, as I mentioned earlier, is putting forth a ruling, which says that anybody who manages a retirement account has to put the best interest of their clients first. It’s a heightened fiduciary responsibility. The responsibility, the the the president fiduciary responsibility is that the investment only has to be suitable for the investor. So this if they move it up, and it becomes has to be in the best interest. FINRA, right, which is paid for by wall street to essentially regulate the financial industry has come out against the ruling.
Jason Hartman 25:50
Yeah, well, what a surprise, right.
Bobby Monks 25:52
Yeah. So So again, rather than being a watchdog for consumers, it’s become a lap dog for the industry. And I think that’s incredibly sad.
Jason Hartman 26:01
Yeah, it is. It is terribly sad. But you know, what, it seems like it’s that way, pretty much everywhere. The Bar Association, it’s just a club for lawyers. You know, they don’t they don’t really sanctioned lawyers, I’m sure they got a couple of cases here and there, you know, to make an example of, but you follow a bar complaint, and basically, nothing’s going to happen. You know, it’s, it seems like the last recourse really, for the consumer in any field, is to just go rant online. You know, it’s just, it’s unfortunate that we’ve gotten there. Because these regulatory bodies, they’re, I’m just gonna say it, they’re bullshit. They just seem like they’re really, you know, I mean, when when was FINRA created, by the way, and and how does Wall Street pay for FINRA to exist? You know,
Bobby Monks 26:48
Well. Well, FINRA is a self regulatory organization, an SRO. And it’s the biggest one in the country. And it was I’m not sure exactly when it was created.
Jason Hartman 26:59
Well, I’m looking here on Wikipedia for our listeners. Well, we’re talking I’m just curious when this thing was created,
Bobby Monks 27:05
But it but it was it was it was originally created in order for the financial services industry would be self regulated. And
Jason Hartman 27:17
Oh. July 2007. It’s pretty new, right? Oh, so So how does Wall Street fund FINRA? I wonder.
Bobby Monks 27:26
Well, they pay they pay fees to FINRA? Yeah, directly. So I mean, they are they are they are essentially fun FINRA.
Jason Hartman 27:35
Yeah, see, see what you know, what happens in these sort of cases is, you know, the governmental, you know, Congress will be saying, look, we’re gonna, we’re gonna come in and regulate you. And they say, Oh, no, wait, wait, wait, we’ll do it ourselves will form an organization, which is basically a shill, right, and they’ve got this arbitration and arbitration is like an epic scam, by the way. And so you know, that the AAA the American arbitration Association, I think, is just a complete scam, just a disgusting organization, just my opinion. The person who puts the arbitration clause in the contract always seems to somehow win. And the fact that these these verdicts are not public, it’s all hidden like some third world countries kangaroo court. It’s just absurd. You know, it’s it’s a completely absurd thing. All of this stuff should be public record. So you know, it says FINRA operates the largest arbitration forum in the United States for resolution of disputes between customers and member firms. Well, then that the customers aren’t the member, only the firm’s are, right?
Bobby Monks 28:36
And of course, they’re getting paid. But what but one of the things Jason, I do want to emphasize, you know, is that the system, you can, you know, the, the system can be demystified. You know, one of the things that I that I do in the book is to try to demystify the system for the average investor. And I and I also believe that there are, there are a number of ways in which you can reduce the cost to yourself, of investing. And one of those ways is to invest in an index fund. Another way is to invest yourself. And the, you know, investing yourself has been poo pooed by the financial industry, because, of course, if someone does that, they don’t get any fees. But if you invest in 10, stocks, you know, and hang on to them for a long period of time, then that is a viable way to invest. And the mutual funds and index funds when they’re selling, they say, well, you have to be diversified. Well, you can invest in any number of global companies that are that are very diversified. And get your diversification.
Jason Hartman 29:43
Or you can just buy the S&P 500. And you know, and usually from from what I understand, the s&p 500 index fund beats all these mutual fund managers time and time again.
Bobby Monks 29:56
That’s exactly correct, and especially netta fees And you know, index funds have their problems too. But they
Jason Hartman 30:05
What are their problems by the way?
Bobby Monks 30:06
Well, first of all, not all the different funds are, are the same, there are some index funds that actually charge fairly high fees. And then there are there’s one of the things that is, I think a an unfortunate scam is that trading costs are not part of the cost ratios of either index funds or mutual funds. So every time they trade that cost the investor a fee. But that fee isn’t, is never disclosed. Another downside of index punches, you don’t really know what you own. And so you may end up ending, you may end up owning the stock, which is important to you. A company that does something that you don’t like, and in one of the problems with index funds is there’s so many index funds, how do you decide which one to invest in. And so, you know, at the end of the day, a lot of people don’t know which index fund to invest in. So they have to hire a financial advisor, which then defeats the purpose of low fees. And, you know, if you want to try if you want to have an exercise in frustration, try to find someone to talk to an index fund about your account. That’s next to impossible. And also index funds don’t vote their proxies in they they tend to vote for management. And voting for management isn’t always a good thing for investors. And that passivity, I believe, costs investor money.
Jason Hartman 31:29
Yeah, it’s a tough world out there. So you you’ve done some real estate investing, it sounds like
Bobby Monks 31:34
I have. I’ve been a real estate developer for almost my entire career,
Jason Hartman 31:38
How come you’re talking about stock stuff? And when you’re a real estate developer? What kind of real estate do you develop?
Bobby Monks 31:44
Well, I do I do a variety different kinds of real estate, I do industrial properties, I do market rate apartments, I do a lot of affordable housing. And I also do office buildings and other commercial properties. And I I feel it I’m, I would totally admit to your audience that I am biased here. But one of the things about real estate developers is they tend to invest in their own projects, they don’t get paid unless they’re successful.
Bobby Monks 32:21
In Wall Street, you get paid either way,
Bobby Monks 32:22
Right. In Wall Street, you get paid either way. And at the end of the day, you can you know, you through the dint of your own skills, can cure the investment. So that, you know, you have some capacity to be able to make change. Yyou know, it’s a big tenant moves out, well, then if you hustle enough, you can get another tenant. And, you know, if there’s a if the taxes are too high, well, you can go back and negotiate with the municipality and try to lower your taxes. So there are ways in which, as a developer, that you can actually affect the investment, whereas the money manager has no capacity to affect their investment one night, they’re completely passive. And so I believe, because of those reasons, it’s better to invest in, in real estate or in actively manages private equity. And
Jason Hartman 33:10
So is the actively managed private equities though open to the small investor?
Bobby Monks 33:14
You know, unfortunately, it is not. You know, you have to be a qualified investor in order to be able to do that, and there were certain financial standards. And I think that’s too bad. I also think that even the qualified investors or the wealthy investors have to be careful, because the, that particular industry also charges way too many fees, they charge, usually 2% of assets under management is 20%. After that, as a bonus to themselves, and
Jason Hartman 33:44
Either the two and 20, or now I’m hearing the two and 22. Right, exactly. It’s two and 22. And then, on real estate deals, a lot of these syndicators, you know, because that’s really private equity too. You know, they’re they’re charging to be the general manager, some of them will take 50% of the deal. No cash in the deal, you know,
Bobby Monks 34:06
Yeah. And I think that’s why that it’s better to, you know, to see if you can direct invest with a developer. And because you cut out the middleman. You know, a lot of these funds
Jason Hartman 34:16
Yeah. But a lot of, a lot of times, that’s what I’m saying the developer is the syndicator. And, you know, they’ll take a big a big part. I mean, you know, it’s, you got to shop that too. And be careful, you know, like anything.
Bobby Monks 34:28
Yeah, I think that that is true. Yeah, that is true. That can happen sometimes. So you know, there’s no investment, it’s completely safe.
Jason Hartman 34:36
Including the bank, that’s for sure.
Bobby Monks 34:39
And, but at the end of the day, what I’m trying to emphasize to investors is spend a little bit of time trying to understand the system, and then engage with the folks that are doing that. I’m asking the tough questions. If enough people ask these tough questions, then potentially they can change. Remember, these guys work for us, you know, the the money managers, we paid them to work for us, we should they should do a good job for us. They shouldn’t get paid if they don’t. And remember, the CEOs of corporations also work for us where the shareholders, so we need to stand up and start taking, you know, the fact the power that we do have,
Jason Hartman 35:13
Yeah, well, I hope that someday happens. I hope there are better tools to be a watchdog developed eventually. Because, you know, we talked about the, you know, parts of this equation, but again, you know, maybe all of this goes, Well, if someone follows your advice, and is really careful who they choose what they choose. But then they’ve still got the the C suite at the company, you know, they’ve still got the execs, the Board of Directors, and they’ve all got their hand in the cookie jar, too. It was really a shame during the financial crisis, when we saw these giant bonuses, and the shareholders were losing their shirt. And still, everybody at Goldman Sachs gets 660,000 a year bonuses.
Bobby Monks 35:55
Yes, I know. It’s unbelievable. You know, I mean, God didn’t descend down from heaven and say that people are Goldman Sachs had to be paid that much.
Jason Hartman 36:02
Yeah, or anywhere else, for that matter. All these companies, you know, they’re all. It’s really, you know, the interest just aren’t aligned, are they Bobby, there’s this this misalignment of interest?
Bobby Monks 36:13
I think that that’s exactly right. But I think the only way we’re going to be able to take that back if is is if shareholders actually stand up. And when I was chairman of institutional shareholder services firsthand, I understand the power of shareholders. I’m not sure if you’re familiar with that company. But what ISS did is it essentially voted proxies for institutional investors. So they would subcontract to us to electronically vote, their proxies also physically built their proxies, and to make a recommendation on how they should vote their proxies. So in any given proxy contest, we were sometimes voting a very large percentage of the stock. So the CEOs had to come into our office and say, well, will you pass our outrageous, you know, compensation plans, and many times we said, No, we won’t. So in that case, because of the collective power of shareholders, we were able to counteract the hegemonic power of corporations. And and that is being done to some degree with activist investors right now. And ISS still exists, it still does that. So and it’s much much easier for individuals to vote their proxies. It’s not
Jason Hartman 37:23
See. See. That’s, that’s probably the way that’s probably the real watchdog organization. It’s not FINRA, it’s it’s this private organization, what’s it called, again?
Bobby Monks 37:34
Institutional shareholder services.
Jason Hartman 37:35
Yeah. And they’re probably the real watchdog until they get bought off by wall street. Because what do you want to bet that there’s, there’s something going on there, too, you know, these these exact sir, probably saying, Oh, well, look, well, we’ll hire some people from there to do some consulting work for us and make sure we, you know, send them some nice checks, or maybe we’ll advertise on their website, or who the heck knows what they’re doing.
Bobby Monks 37:59
You know, any system can be corrupted. But if you look at the average investor, now, you know, for many, many years, people would get their proxies, and then throw it in the trash can, because nobody wanted to wade through this. And, you know, there’s impossible, you know, verbiage that was what a proxy was. So either people just checked off for management, or they threw it in the trash can. Now, you can get a proxy electronically. And they can identify the two or three issues in each proxy in simple language that says, and you can vote for those two issues for each company that make a difference, like executive compensation, who the auditor is, or whether they should merge with another particular company. So, you know, individual investors now have the tools because of the internet did they didn’t have to be able to be more engaged. And if enough investor stand up and do that, then I think that will make a real difference.
Jason Hartman 38:50
Yeah, yeah. Good point. Hey, give out your website. Bobby. tell people where they can find out more
Bobby Monks 38:55
They can go to invested the book calm. And they can go to my website or they can go to Bobby monk dot com. Either one.
Jason Hartman 39:04
Bobby monks dot com as well. Okay, good stuff, Bobby Monks. Thank you so much for joining us.
Bobby Monks 39:09
Well, thank you very much for having me. I really enjoyed it.
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