Looking over Dana Point, California, Robert Binkele, CEO of the Estate Planning Team calmly and clearly reveals how his simple concept is redefining what’s possible for even entry-level and skilled insurance agents and financial advisors. Engineered Capital Gains Solutions Inc. (ECGS) approach to marketing this strategy is brilliant.
The former pro football player’s firm, it turns out, has co-created a unique tax deferral strategy that’s so powerful it’s instantly saving businesses and real estate owners millions of dollars. It’s also creating a network lead-generation funnel so vast for agents joining that many are gaining direct access to high net worth clients without spending another dime in marketing seminars looking for new clients.
In fact, they’re having a record year despite the Pandemic. Why? Simply put, times are changing. There’s a historic baby boomer generation retiring — and a massive transfer of wealth is flowing with it. With the low cost of money, many are facing overvalued market conditions and now have a huge need for capital gains tax deferral.
By offering capital gains tax deferral as a new approach, the doors have opened to what every advisor or agent is looking for — high net worth prospects. The opportunity to liquidate real estate or a business is now, and agents and brokers need our help to list and sell these assets. ECGS has the turn-key marketing system to reach them and their clients by utilizing capital gains tax deferral as a solution.
The bigger picture is the ability to market to industry professionals, CPA’s, Business Brokers, Commercial Real Estate agents, and Estate Planning Attorneys who all go to work to help your business grow. It’s a team approach and there is nothing more powerful.
Matched with the new partnership with premium finance expert and founder of Northstar Funding Partners Kim Coulter, ECGS might just have become the most powerful business-building strategy ever introduced.
“With all I have ever seen out there, I can attest that this is far and away the most outstanding opportunity to ever hit the insurance industry,” Quinn Ellis, the company’s director of business development, exclaimed. “Outstanding” might be an understatement.
In this rare Q&A with co-founder Robert Binkele, you’ll discover firsthand how this strategy is elevating production for producers and the IMOs, FMOs, BGAs, RIAs and broker-dealers involved — even opening the doors to major premium finance cases.
Q: What exactly is Engineered Capital Gains Solutions Inc.’s tax deferral strategy?
A: In its simplest terms, if you were a business owner and you started your business like most people do, which is from scratch, and today it’s worth $10 million and you want to get out of it, either to retire or do something else, you would have to pay capital gains taxes on all of that $10 million.
If we take a ballpark estimate, after federal and state taxes, you would be paying up to $4 million directly to the government. That means at the end of the day, the business that was worth $10 million when you sold it pays you less than $6 million after deducting commissions and closing costs.
Four million dollars is a lot of money to just give away. And it is those taxes that keep a lot of business owners, real estate and stock investors, and collectors of fine art or antiques from selling when otherwise they would love to.
Now, imagine talking to that business owner or a business broker who is trying to sell but does not want to because of the huge liability. Imagine how they would respond if you told them that you could help them quickly sell the business and keep all $10 million — paying zero dollars to the government in capital gains taxes (and even making money on it).
Well, after analyzing the way IRC 453 installment sales were designed in the tax code over 90 years ago, we realized we could create a trust for large business and real estate sales, and we can help financial advisors or insurance agents grow their financial services practices. When our transactions close we secured our installment notes with diversified forms of various insurance products, annuities, mutual funds, managed accounts.
Now, not only does the seller receive the full value of their sale, but also, depending on how the sale is designed, that money can grow and pay them interest and principal.
Using this capital gains tax deferral strategy, people wanting to liquidate their assets are able to keep the full value of their business or real estate sale and grow its value in a diversified and secure fashion, and the agent or advisor winds up writing annuities and life insurance policies because of it.
Q: What are the biggest benefits for someone using this strategy?
A: One, we help people live off more money. Ask anybody if they would rather live off $10 million or $6 million — I think you know the answer to that.
Second, selling a business this way provides security and diversification instead of having all their money still tied up in the business or going through a standard installment sale. So the person who owns the business and wants to sell to the trust would become a creditor, and their money would be secured against the money that is inside the investments and the trust. In other words, they become creditors to the trust. They also get to approve or disapprove every investment that goes into that trust — which is where an insurance agent, financial advisor or Registered Investment Advisor (RIA) comes into play.
Third, there are more than capital gains taxes at stake. In many regular circumstances, if you were to take the tax and have all of it hit you at once, you’re thrown into the highest income tax bracket. By securing that money in an annuity or other investment, you’re now letting the seller receive income in a lower tax bracket.
The last benefit I like to bring up to people is the rule of 72.
Let’s say that you sell a business and the capital gains taxes would have been $1.5 million. Using this strategy, it’s like telling the sellers that not only do they get to keep the $1.5 million inside the trust, but they only have to pay tax on the additional money that it earns.
Looking at the rule of 72, let’s say you could double that money in 10 years or less. The $1.5 million you would have owed to the government is now worth $3 million. Even better is you could double that again in hypothetically another 10 years, whereas if you just wrote the government a check on a standard sale, that money is gone.
With their money in a trust, clients don’t owe the government interest on the original transaction; they only owe their tax on the amount of money they are paid with their installment.
Q: What is the opportunity size that a strategy like this represents for agents and advisors?
A: It’s huge. Spread across the entire country, there is currently about $120 trillion worth of assets that are perfect for tax-deferral strategies like this one. And as I mentioned, it’s not simply businesses but includes art, farms, real estate, stock, mineral rights, yachts. This strategy benefits anything that involves highly appreciated assets. It also drastically differentiates those using it from everyone else working the typical Social Security seminars. We don’t need to bribe people to listen to what we have to say. That’s the key. Is your marketing plan dead? Not so with our capital gains solution, in these changing times, group and face to face meetings are out, we teach the agent to market differently.
Q: Are you looking to recruit agents and advisors to work for you? How does a strategy like this impact IMOs, FMOs, BGAs, broker-dealers, etc.?
A: We are creating a win-win-win situation with this program for everyone involved. This strategy doesn’t require anyone to leave and change insurance contracting. In fact, we’re all about protecting and elevating those firms like FMOs.
After all, agents and advisors joined their IMOs and FMOs for a reason. We do not want to disrupt that. We just want to help them grow within their respective firms and help those firms grow. At the end of the day, we want to give them some unbelievable options that can carry them into a wealth-transfer setting in a more prepared fashion than they ever had before. This strategy helps those working within their IMOs and FMOs access those high net worth clients that they would otherwise never gain access to.
Regardless, this program is set up so that whether you are an FMO or a broker-dealer or an RIA, you are going to manage the money. We simply supply you with the strategy to get you in front of the owners and key decision-makers — and do it without spending a dime on expensive seminars, dinners and other plans that might not pan out.
Our job is to take whatever case an agent or advisor finds from start to finish so that the agents benefit from positioning and writing their products. With proper diversification, the advisor works with the trustee to invest in REITs, bonds, annuities, securities, life insurance or other prudent investments that are suitable to help assure the trustee’s performance in repaying the seller-taxpayer according to the held installment sales note. The reinvestment of the proceeds may result in more or less risk, depending on the nature of where the proceeds are
reinvested and the seller-taxpayer risk assessment. All the heavy lifting is completed by our tax team, our case managers and our trustees.
Q: How difficult is it for an insurance agent or advisor to learn your program and get started in the market?
A: It’s very simple. We give everybody a link to get on the system. It takes about five minutes to get on. Next, they’ll be greeted by our estate planning team with a nice letter welcoming them and letting them know what we are going to do. From there, we train them — everybody needs to be trained so they know what they can and cannot do.
We’ll even train them on how to walk into a business brokerage office — and we’ll even do it with them. It takes just three hours a week to start out and learn the ropes. After that, they sit in on calls and shadow how the process works so they can see for themselves how simple it is, because business brokers want to make deals, but many of them, as stated earlier, simply can’t work around the capital gains tax burden many business owners face.
This solves the problem so well that it has those brokers chasing after agents and advisors who know about this strategy. And all the advisor must do, in many cases, is make the introduction, and we’ll handle the rest. With the partnership with Kim Coulter, that means even helping with premium finance case design.
No seminars, no dinners, no plate lickers. People following this strategy hold a unique power that lets them access the nation’s big-ticket clients. •
THE ESTATE PLANNING TEAM, NORTHSTAR FUNDING PARTNERS AND ENGINEERED CAPITAL GAINS SOLUTIONS INC. INTRODUCE AN UNBEATABLE COMBINATION OF LEAD GENERATION AND PREMIUM FINANCE
The business opportunity that Engineered Capital Gains Solutions Inc. (ECGS) represents in the large case market is so enormous that legendary premium finance expert Kim Coulter and his Northstar Funding Partners have joined forces with ECGS to help agents and advisors following the ECGS strategy place the largest cases of their lives.
“Financial services professionals are always searching for new client opportunities. With this strategy, those opportunities now mean five-, six- and even seven-figure premium sales,” Kim Coulter explains.
“With regards to financial services products life insurance can be integral to the strategy and in some settings an ideal method to provide an estate planning solution or long-term supplemental income. As the trust disperses funds, those monies can be allocated for life insurance and perhaps leveraged in a financing scenario. The possibilities here are varied and unique. The disbursements combined with life insurance financing could generate significant benefits for the seller as they defer taxes and use the financed policy for their long-term financial needs.”