JF971: Why and How to COMMIT to EXTREME Wealth #SkillSetSunday
Want to be, hope to be, or wish to be wealthy? Why not just commit to be wealthy? It starts with your head. Our guest is about to lay the basis for having a mentality of extreme wealth!
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John Bowen Real Estate Background:
– Founder of four multi-million dollar businesses, including CEG Worldwide and AESNation.com
– Host of Accelerating Entrepreneurial Success Podcast
– Founder of Financial Advisor Select, an organization that matches customers with vetted financial advisors
– Author of more than 15 books and a regular columnist for The Huffington Post and Financial Planning
– Based in San Martine, California
– Say hi to him at http://www.aesnation.com
Click here for a summary of John’s Best Ever advice: http://bit.ly/2pUYXa0
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Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate podcast. We only talk about the best advice ever, we don’t get into any fluff. We’ve spoken to Barbara Corcoran from Shark Tank, Robert Kiyosaki, the author of Rich Dad, Poor Dad and a whole bunch of others.
With us today, John Bowen. How are you doing, John?
John Bowen: I’m doing fantastic, Joe. I really appreciate the invitation and I look forward to helping your listeners be even more successful.
Joe Fairless: Well, that is a wonderful thing, because I would love for my listeners (and myself) to be even more successful.
John Bowen: This is one that we’re all aligned. You can’t be too healthy or too wealthy.
Joe Fairless: Exactly. It reminds me of one of my favorite book, Crucial Conversations, where you start out with a mutual purpose, and then you build up from there, which you just did… So I love that.
A little bit about John – he is the founder of four multi-million-dollar business, including CEG Worldwide. He’s the host of Accelerating entrepreneurial success podcast, he is the founder of Financial Advisor Select, which is an organization that matches customers with vetted financial advisors. He’s authored more than 15 books and is a regular columnist for The Huffington Post. You can say hi to him at his website (it’s in the show notes page) and he’s based in St. Martin, California. With that being said, John, do you wanna give the Best Ever listeners a little bit more about your background? And then we’ll dive into the focus of our conversation.
John Bowen: Well, Joe, my whole professional career is in financial services, but I grew up in a small town upstate New York, and my parents were entrepreneurs. My dad and my uncle owned a cast iron foundry, and I was always being groomed to be a key part in it and ultimately take over. I can still remember a call in my junior year I got from my dad… I was kind of the rich kid in the small town, and in my junior year I got this call, and I’m waiting, because my dad every year would give me a call before the summer break to tell me what job I was gonna get. He was one of those big believers, hard knot, so he would give me the worst jobs, but I thought this year I might get an air conditioned office job, and he calls me up and he goes “John, I’ve got some bad news…”
The founder, which had been employing 400 people, is going under, and I’m gonna go get a job because we’ve got nothing. Your uncle is gonna wrap it up and go through bankruptcy, and your mom and I have decided to get a divorce, and you don’t have a summer job. That was a turning point in my life, Joe, because I remember taking a step back, and I go “Dad, are you gonna be okay?” and he said, “I don’t know.” That was when I committed to being in the financial services; I had the privilege of being a financial advisor to really almost every walk of life, but mostly business people, real estate investors like your listeners… I’m in Silicon Valley, so high tech has been a big part, and then at one time I had a [unintelligible [00:05:07].20] business as well.
We had 600 of the highest profile — I mean, most of your listeners would know well over half the clients’ names, and we had the largest collection of NFL quarterbacks, for instance.
I saw over and over again, Joe, and you know this from your real estate experiences, people make costly mistakes along the way and they don’t need to. If we’re gonna build personal, really serious wealth, then we gotta stop those mistakes.
Joe Fairless: Yes, we do; we’ve gotta stop those mistakes. You had mentioned something before we started recording, that your group has been doing a study, all in an effort of both stopping mistakes and also creating long-term wealth. Can you tell us a little bit about the study?
John Bowen: You might know Dan Sullivan of Strategic Coach, Joe Polish of Genius Network… Dan is one of the most successful entrepreneurial coaches; Joe is more of a marketing mastermind, he’s got a mastermind group… Probably one of the most successful in that. And the three of us got together, and I can make available, Joe, it’s at our website, AESNation.com, we have The State Of The Entrepreneur. We did a big study of 3,500 successful business owners, and we look and said, “Okay, how are you being successful? What’s working? What’s not?”
We saw their big financial concerns number one was making smart decisions about their money; whether it’s traditional financial assets or real estate assets, they wanted to do that. They also wanna mitigate taxes, take care of the errors, protect the assets from litigation and divorce, and charitable.
We did that study, and that got us on a journey of going deeper and deeper. What we found was that 88% of the business owners, quite honestly, are disappointed in their professional advisors – financial advisors, accountants, attorneys, in they’re not being proactive; they’re missing the solutions. So what we do is we coach financial advisors, we train the top tier wealth managers on the [unintelligible [00:07:14].20] of what the super rich (people with 500 million or more) are doing.
My partner in this is a guy Russ Alan Prince, who’s written 50 books, writes for Forbes, has a whole bunch of millionaires, consulting engagements, family offices, that type of thing. And what’s been missing so often, Joe, is there’s so much of this — what people who have, for the most part, unlimited resources and access to talent and solutions, they have that, and so many of us as individuals don’t. But you can bring those down now, because the networks, the cost of technology has brought them down, so that really more average folk can do this, and it accelerates your success, your ability to build that personal wealth up.
One of our goals is to have everybody that really wants to build wealth to become seriously wealthy. We define that as 20 million dollars financial assets, personal – not in your business. I would count real estate as a business. You know, it’s never quite passive; there’s a little work involved in this stuff, but building those passive assets so you can fund whatever quality of life you want… When you have 20 million, there’s enough for private jet money.
Joe Fairless: You mentioned you all did a study on what people who have 500 million or more are doing… What are they doing?
John Bowen: One of the things that’s kind of interesting in all this is they are going ahead and they’re being very deliberate about building their wealth. When we think of it, the whole process of this – I’m gonna pull up so I get the seven rules right in order for you here… So when we did the study of the 500 million and above, what we found was there’s seven things they do; I’ll just go through them fairly quickly, because of our time.
Number one is a commitment to extreme wealth. This is that mindset, Joe, that you talk about… You have to decide that you wanna do it, because it’s gonna take a fair amount of work. Second is engage in what we call “enlightened self-interest.” Capital markets work because of enlightened self-interest. Whether you voted for president Trump or not, he wanted to put America’s self-interest first – it’s that type of thing. Those people are doing it.
Now, what’s key – and I’ll come back to that – is you’ve gotta take care of everybody, but the first rule is commit to whatever your number is that you wanna build; number two, engage in enlightened self-interest, and number three – and this is a big one, and this is one of the reasons, Joe, I’m sure you’re involved in real estate – is put yourself in a line of money.
If I’m gonna look at the largest wealth that’s being built around the world, it’s coming from business owners. It’s coming from real estate. Those are the two drivers of wealth out there. Number four – and this is a key one – is you pay everyone involved. One of the things – you think so often that the people that are building these huge net worths, that they’re cheap… They’re not. They’re very deliberate on who they hire, they work with the top talent, and they make sure they’re taken care of. And then they are big networkers.
One of things… I spent over a hundred thousand a year in mastermind groups. Why? The old line of “Your network is your net worth.” It’s not networking, it’s the network that you build, and they are unbelievably connected, and it’s connected deliberately on creating value that can result in economic gain.
Number six is they’re fine failing. I’m in Silicon Valley; it’s fail quick, fail fast. But they use failure to refine and refocus.
And above all, rule number seven is stay focused on that extreme wealth. We go in a lot of detail… We’re actually just finishing a book, so I’m pulling up that book that we’re writing. This is on those at the high level, that we see.
Joe Fairless: “Your network is your net worth” – is that number five?
John Bowen: Yeah, number five.
Joe Fairless: Okay. Enlightened self-interest, number two – what does that mean exactly?
John Bowen: There’s a lot of nice people out there, and what you wanna do is you wanna be deliberate in what you’re doing; you wanna define your own criteria for success. Joe, you and I define our success differently. There’s no one right or wrong answer. We’re at different times in our lives, and all that stuff. Everyone has to define it for your own, and then what you wanna do is you wanna determine what your counterparty – whoever you’re gonna do the deal with, you’re negotiating with, you’re partnering with – what is their criteria for success, too? And then you’re gonna find that and leverage it to use it.
Joe, if we’re looking to create economic glue, and we’re gonna do a deal together… I’m the first to make sure that whatever I’m doing is going to be aligned for my success criteria, then I’m gonna try and gain a better understanding of what you want to accomplish; can I help you advance what you want to achieve, and will that move me toward my success? Then I’m gonna go ahead and negotiate in good faith to have that happen. That’s really what it’s all about.
You never wanna burn the counterparty, whoever you’re working with, because we’re in it for the rest of our lives. You wanna make silence, and one of the things you’ll find about billionaires is they’re silent a lot. They’re letting you do a lot of the conversation, and one of the biggest risks of all is so many people negotiate with themselves; they’re going through all these mind games. What we wanna do is hear from the counterparty how we can we help them be successful, and then how can we design it to achieve that mutual success in our own enlightened self-interest.
Joe Fairless: I’m gonna go through the seven, and I’m going to elaborate on how I interpret them, and then feel free to correct me or elaborate on what I mention, just so I can make sure I’m understanding.
One – commitment to extreme wealth. We need a quantifiable goal. You mentioned earlier you define seriously wealthy as 20 million dollars personally, not including real estate owned property. Is that correct?
John Bowen: That’s correct. Liquid financial assets. And real quick – what’s your number? That’s what we’re asking. Commit to extreme wealth – just determine whatever that means to you. For some people it’s a million dollars, for some people it’s a billion. It’s everywhere in between.
Joe Fairless: Okay, good. So it’s quantifiable and it’s personal. Two, engage in enlightened self-interest. You need to know what you want first, and then you need to structure the partnerships accordingly, so that you can get what you want, as well as identifying what your partners are seeking, and have alignment there.
John Bowen: Yeah, you wanna gain the advantage in negotiating and use that leverage, but make sure both parties win.
Joe Fairless: Put yourself in the line of money. Earlier you mentioned real estate and business owners; so the number one way according to the research you’ve done with 500 million net worth individuals or families and above is they’re making their money either in real estate and/or as a business owner…
John Bowen: Let me just give you a number. People with 25 million or more of financial assets, 9 out of 10 made it being an entrepreneur (business owner). And even at a million dollars in financial personal assets, one out of three made it as a business owner. Now, I’m counting, Joe, real estate as a business in that definition, too. That is really important. What we have is an opportunity here…
Once we know that’s where the money is — it’s like, you and I could decide to be social workers; we could make a huge difference in the world doing that, but we’re never gonna become wealthy. That’s not in the line of money.
Joe Fairless: I think the majority of the listeners are shaking their head and saying, “Hell yeah, that’s why I do it, baby!”
John Bowen: If you’re gonna be successful, you wanna be successful on purpose, and this is a big one… We find so many people — if you’re gonna do a nine to five job and you’re gonna do it well, you can have a great life; I don’t wanna ever say that — it’s different things for different people, but you’re not gonna become extremely wealthy, you’re not in the line of money. Unless you have an equity ownership, you’re not in the line of money.
Joe Fairless: Number four, pay everyone involved… And really, it’s pay everyone involved who has a high area of expertise in their field very well, correct?
John Bowen: Yeah. You wanna motivate that talent to be inspired… One of the things I love – I’ve got about 50 people in my companies; I have a virtual business in place… I love getting up every morning knowing 50 fellow entrepreneurs are really working hard to try to help me be even wealthier. Now, I am paying them well to do that as fellow entrepreneurs, too. This is at alignment. That’s that economic glue I was talking about.
Joe Fairless: As far as the compensation for other team members – are you heavy on incentives, or are you more on salary, or is there an approach you take?
John Bowen: I’m not big on salary. You wanna build something – particularly the key talent, you’ve gotta provide an opportunity for them to be successful, too.
Joe Fairless: Number five – network is your net worth, it’s self-explanatory there. Do you make a concerted effort to identify the closest people around you? Because I’ve heard some people say “Hey, you should have six people who are in your closest people, and those six people will be able to determine your net worth based on the average.” Do you look at it as granular as that?
John Bowen: No, Jim Rohn, a great motivational speaker – his was five, he always said. I think in today’s world, you can have high network and loose ties, both personally and in business… But what we find is there are very few networks that are bigger than about a hundred. I have LinkedIn, I know the number – I have over 5,000, and I think about the same on Facebook… I don’t have 5,000 friends. I have a database with between business owners and advisors of around 400,000. I’d like to believe everybody knows who I am, or they wouldn’t be on our database, but that’s not a network.
The network is somebody that I can get on the phone, and we can have a conversation and create value together in our collective, enlightened self-interest, and we’re gonna maintain that relationship over time. We see at the most it’s usually about a hundred people, and more typically we’re seeing somewhere between 10 and 50. But these are not your best friends’ network; these are business people that you’re working with, that are going to help you advance to whatever your number is, but you’re gonna do it with them as well.
To me, this is probably one of the most important things. A lot of it is strategically stumbling, I call it. You and I are just meeting, we were introduced by Jessica Rhodes of Interview Connections, and this is a great way, I found — I do podcasts because I love meeting the people who are doing podcasts, like yourself, are drivers, and so often out of this type of things conversations happen; it could be we develop synergies, we may not. Putting yourself out and then really watching that network to create value is so important.
Joe Fairless: Is there a particular tactic/approach you use to stay in touch with someone that you desperately want to stay in touch with after you were introduced to them?
John Bowen: What I do is I try to create value. When I meet them, I’m always looking to see what the value is. I’ve had the privilege of starting a number of businesses and I’ve been pretty successful and I have a bit network. There’s almost always something I can do, a quick connecting there, and then following up – I make sure that I follow up within two days of any event that I’m doing, and then three weeks later.
I don’t know what the benefit will be down the road, but I know this is a cool, talented, knowledgeable person I want to stay in touch with. I’ll also include them if I can help them on my networks, bring them out and share them, whether it’s virtually in some of the events I do, or live events… And then things happen.
Joe Fairless: Number six, did you say “refine failing”? Did I write that down correctly?
John Bowen: Failure to refine and refocus.
Joe Fairless: Okay. Will you elaborate?
John Bowen: The key here is “I screwed up. I tested something.” The nice thing in today’s world, the cost of testing anything has gone way down, whether you’re creating products, the ability to 3D print, whether you’re doing it electronically, the internet, buying a few ads digitally… It’s very low cost. Good business people always mitigate risk; we’re not big risk-takers. But what we wanna do when we fail – we wanna fail quickly, and then how do we avoid making the same mistake repeatedly? And more importantly, doing an autopsy so we can see “Is there some value here that we can capture and tweak it, refine, it refocus it to create value?”
Joe Fairless: Can you give an example of your own business, how you’ve used failure to refine, refocus and then ultimately come out ahead?
John Bowen: I had a business coaching top financial advisors, and we have about 500 advisors in our one-year coaching programs. Of those 500, 200 are in a mastermind group. They pay anywhere from 18k to 24k/year. These are the top wealth managers, not only in the U.S., but around the world. I have a great guy, he’s one of my key educational development people, PhD from Berkeley, and Dr. Bob came and goes “John, you know what? We should teach the next tier down, how to get to the level.”
The average income in this group is about $700,000; very successful individuals, many making over a million a year… Targeting kind of the $200,000 threshold. I said, “Okay, I’ll give it a shot…” I had some concerns, both with the branding and positioning, as well as how hard it is — successful people are easy to coach, because they just take the ideas, run with it if it works, and they continue, and it’s great. People who are unsure of themselves and don’t have that confidence – much more work.
We ran a pretty big project for our company, Bob and I. Did it work? The answer: marginally. We said, “Do we wanna do it again?” “No.” Why? Because it was so much more effort than working with the top tier. We only have two solutions for our company for our financial advisors: one coaching program and a mastermind group. There’s all kinds of temptation to do more, and I can tell you, Joe, we tested a whole bunch of things, we came back – and we’ll probably test some more things down the road, but it’ll always come back to “Fail quick.”
Joe Fairless: And then number seven, stay focused on extreme wealth. So number one, we committed to extreme wealth, and then number seven, we’re staying focused. What’s a tool or technique to stay focused on our original plan?
John Bowen: It’s always keeping number one in place. One of the things I like to do, Joe, is to take a look, from the standpoint of “Where are you spending your time, your money and your energy?”, because really time isn’t a finite resource, it’s energy. And take your calendar – I’d encourage all your listeners to take their calendar and look at it for a week. We can really get caught up in going ahead and thinking because we’re so busy, we’re doing well; what I find over and over again (and it’s one that I struggle with, too; and many business owners and entrepreneurs do) is it’s so easy to lose track of what’s working and get defused… And as we get defused, boy, we’re in trouble. So it’s focus, focus, FOCUS.
Joe Fairless: Well, I love this title — it’ll definitely be a title: Seven Ways 500 million dollar net worth individuals…
John Bowen: We call them The Money Rules – How To Join The Ranks Of The Super Rich.
Joe Fairless: Yeah, how they build wealth… Or the Money Rules, even more succinctly. Anything else that you wanna mentioned that we haven’t talked about as it relates to that topic?
John Bowen: I think the big thing to think about is we live in a great world; it’s a time of abundance, it’s not a zero-sum game… For you to become wealthy, somebody else doesn’t have to lose money. We can create wealth. In financial markets it’s really easy; in the first 40 days of the president Trump, I think we’re approaching two trillion dollars of value created. Nobody was taken money from, it’s that value.
Now, what we wanna do then is not only create that value – and you can go to our website and download the book The State Of The Entrepreneur, get on our mailing list so you get access to this stuff… But what happens, Joe, is it’s what you get to keep and making those smart decisions along the way.
Joe Fairless: John, where can the Best Ever listeners get in touch with you or your company?
John Bowen: The best place for business owners and successful entrepreneurs – we have a website called AESNation (Accelerating Entrepreneurial Success) and we are launching a whole bunch of new books, and stuff. At the time of this recording, we’re a couple months away from — everything’s gonna be launched in June 2017, but there’s a bunch of resources there, too… I’d recommend everybody download the book that I wrote with Joe Polish and Dan Sullivan, called The State Of The Entrepreneurs. You can see how you’re doing, and then there’s a scorecard where you can look at “Are you really maximizing your personal wealth?” and if not, how you can get a second opinion to see how you can accelerate it even more.
Joe Fairless: John, it’s been interesting and educational talking to you. I appreciate you spending some time with us and walking us through the money rules, the seven ways 500 million dollar net worth individuals approach building wealth. I won’t go through all seven again, because we just walked through them. A lot of lessons within those seven…
Thanks for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon!
John Bowen: Thank you very much, Joe.