Lead-Lag Live

Beyond Stocks: The $12 Billion Alternative Investment Platform

• Michael A. Gayed, CFA

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Alternative investments are no longer just for institutional players and ultra-wealthy individuals. As Henry Yoshida reveals in this eye-opening conversation, everyday investors are increasingly allocating portions of their retirement accounts toward private investments outside the traditional stock and bond markets.

Yoshida, a 23-year CFP veteran who built and sold both a financial advisory firm and a robo-advisor before founding Rocket Dollar, has created a platform that now manages $12 billion in alternative assets within tax-advantaged accounts. His company provides the infrastructure for investors to use their IRAs and 401(k)s to invest in private equity, real estate, cryptocurrency, and even unusual assets like cattle and racehorses.

What makes this approach particularly interesting is the psychological benefit that comes with these investments. Unlike public markets where constant price fluctuations can trigger emotional selling, alternatives typically lack minute-by-minute valuations. This reduced transparency often helps investors maintain long-term positions without succumbing to short-term market noise – something Yoshida's customers have repeatedly confirmed.

The platform primarily serves "mass affluent" retail investors with $250,000-$5 million in investable assets, who typically allocate 10-20% of their retirement funds to alternatives after experiencing significant gains in public markets. Rather than sourcing investments directly, Rocket Dollar solves the "demand side" by giving investors access to their retirement funds for private investments they've identified elsewhere.

This democratization of alternative investments comes at a crucial time. As Yoshida points out, the traditional pathway for companies growing from small caps into large ones has fundamentally changed. Companies like OpenAI and SpaceX enter public markets at already massive valuations, meaning retail investors miss the substantial growth phase that historically occurred in public markets. Through alternative investments, individuals have potential access to these opportunities earlier in their lifecycle.

Whether you're considering diversifying your retirement portfolio or simply curious about the expanding world of investment options, this conversation offers valuable insights into how the investment landscape is evolving beyond traditional asset classes.

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Speaker 1:

You're building up this platform. You've got these multiple sites. You mentioned $12 billion. How do you grow?

Speaker 2:

a company like this. We've been largely direct-to-consumer. I just saw that we made another list of top alternative investment IRA platforms. People search these things. They're looking for how to do more innovative things with their 401ks or IRA monies. We know that there's an uptick in interest in private and alternative investments, that there's an uptick in interest in private and alternative investments. And then even some of the things I just talked about in the article just maybe three weeks ago was that even some of the large brokerage houses are starting to really develop relationships to deliver alternative investments, like Vanguard working with Blackstone, Edward Jones talking about offering an alternative investments platform. So we're just in that ecosystem. We've been there, We've been direct to consumer, but I think this year and going forward it'll it'll serve us well to get maybe like a little more friendly, a little more known by the investment advisor community. And that's the world I come from.

Speaker 1:

I look forward to this conversation with Henry Yoshida. We're going to be talking about a favorite topic of mine, which is alternatives, which a lot of people used to think are clear alternatives to making money, but now may not be the case. From a cycle perspective, we'll talk to you on that and, spoiler alert, there might be a new person joining me to help host some of these interviews. I'm expanding and growing the team, so you'll see some news from me soon enough on that. With all that said, my name is Michael Guy, a publisher of the Lead Lager Board. Joining me here is Henry Yoshida. Henry, first time you and I are chatting, you had reached out. I think you have an interesting background, but introduce yourself to the audience. Who are you? What's your background? Have you done throughout your career?

Speaker 2:

And what are you doing currently?

Speaker 2:

Yeah, I'm maybe like a lot of people that you kind of talk about. I started my career as a financial advisor. I did that for 10 years on the wire house broker's side from Merrill Lynch 2000-2010. So a real interesting time to be there. I joke around. I made it through two crises. The company only made it through one of them before getting acquired by B of A of them.

Speaker 2:

Before getting acquired by B of A, split off to do an RA, grew and sold that and then since then I've been doing fintech products. So all kind of focused in my niche, which is retirement plans. So built a robo-advisor for Roth IRAs. That got acquired. And now I built a digital platform that does alternative investments inside of IRAs so think outside of stocks, bonds and mutual funds. You could do private and alt investments everything from crypto, real estate and everything in between in the alternative private space in an IRA called rocketdollarcom and we go under the moniker of retiredcom. So that's a little bit about me, and I've been a CFP for 23 and a half years now. I just realized that I'm way over the 20-year mark on that. So I just love personal finance, retirement accounts it's kind of my thing and building products in that space.

Speaker 1:

So my mind goes to a lot of different areas on the platform. I want to learn more about it, but let's first define properly for the audience what an alternative is, because I personally believe that a lot of things claim to be alternative, but they're just variations of beta.

Speaker 2:

Yeah, so the way I refer to alternative and it's changed a lot. When I started my career, I remember alternative investments were just things that maybe were mutual funds that might've invested in certain countries outside of maybe the top 20. But the way we define alternatives are investments that are private and non-registered, so they can be quasi-registered. So I think you got a lot that are sort of a hybrid, just like maybe how an ETF is a hybrid to a mutual fund or an individual stock. Private investments I'm talking about non-registered LP investments into private equity, private venture funds, real estate syndications, real estate outright or cryptocurrency Something that's just not publicly registered in your quote-unquote, normal Q-sub driven investments. That's probably what we define as private and alternative.

Speaker 1:

And of course there's liquid aspects and illiquid aspects to alternatives. I think you know, when you think about sort of a Swenson endowment model, when you think about the alternative framework, there there's this illiquidity sort of premium right that happens over time. But let's talk about sort of the idea that an alternative maybe needs to be more on the illiquid side than liquid to be considered alternative.

Speaker 2:

That's a good point. I didn't touch on that part so it would be a liquid and I don't know the way we do it now. It might actually help people from. All of our customers are retail individual investors and I've dealt with those retail individual investors. I've never been an institutional guy my entire career those retail individual investors I've never been an institutional guy in my entire career. And the illiquidity premium. Now there's more democratization and access to alternative investments. But I think that actually having this sort of situation where you might not have a constant mark to market has been psychologically better for that retail individual investor and allow them to sort of hold on stomach being an investment. So you know information just too readily available sometimes in the public market. So we found it's a little bit better to both have an illiquidity premium for private alternative investments but maybe also not knowing on a moment-by-moment or a minute-by-minute basis or a day-by-day basis what the actual value of that investment is. It's been kind of psychologically better. We've talked to thousands of our customers about that too.

Speaker 1:

It's kind of interesting caveat, yeah, which, which is actually I think, why, uh, private credit has been so popular? Argue right, it's like there's no mark to market. So you know, there's the illusion of stability when you're not marked to market right. And actually there's a lot of good studies around that. There's a study that shows that. You know people that, for example, look at at their 401k statements monthly versus quarterly. If they look at it monthly, they tend to have worse performance because they end up seeing too many data points and that causes them to sell at the wrong time versus quarterly. In some ways, the less transparency maybe the better.

Speaker 2:

Exactly right. I'm guessing a lot of your listeners too, those of us we would have been pretty well served maybe going on a vacation in April, a little bit earlier this year, and coming back not paying so much attention to our investment accounts and coming back in early May, late April.

Speaker 1:

Yeah, literally just blink your eyes. That's all you needed right From that standpoint. Okay, so talk to me about the platform itself, and how do you even go about sourcing alternative investments?

Speaker 2:

even go about sourcing alternative investments. Well, the way we started, actually, what we found was there was a lot of demand for actually not sourcing those alternative investments for the customers. What we found is the customers kind of had written a lot of gains. These are IRA and 401k customers, so the only accounts we offer are tax advantage. They tend to be long-term, they tend to be accumulated by just consistent and sort of large percent of salary contributions into a 401k and as people change jobs you know, Michael, I think you told me that you know at any one time you have like three or four different ones and so forth. So you accumulate 401ks, you put them into an IRA.

Speaker 2:

People have gotten pretty tremendous gains in the public equities markets and these accounts and they're actually looking to diversify.

Speaker 2:

The issue that we actually solve is not so much trying to give them those alternative investments to go into, but giving them access to their monies and tax advantage accounts and then go do alternative investments that they may actually source on their own through, let's say, shows like yours, for example.

Speaker 2:

So we've more facilitated, I think, the access, and one of the ways I talk about it is that there's plenty of people doing the supply, people creating investment vehicles, syndications, ETFs, you know private fund structures and so forth. You know I'm not as creative as those people coming up with innovative investment strategies and new funds. I focused on the demand side. There's, there's, there are tens of trillions of dollars in retirement accounts right now and the large, large majority we're talking high ninety nine percentile range of it is sitting in public stocks. So these monies actually can't be used for any purposes other than investments without tax penalties, until after fifty, nine and a half for most people. And you know, my sort of epiphany was to say that, hey, I think people want access to that money to go into private investments that they may already know about or feel comfortable or feel like they have an edge to research on their own.

Speaker 1:

So, of course, the natural question, I think, by a retail investor would be why do it? I mean, hey, my NVIDIA is doing great, my Mac 7Qs are doing great, why be an alternative?

Speaker 2:

no-transcript. First, to say that our particular account structure is usually not the primary for someone, unless they happen to be, let's say, just a pure real estate person or just a pure crypto person. Then they have a majority of those tax-advantaged account monies with us. But the average person usually only holds between 10 to 20, and it's a diversification strategy after just getting tremendous gains. So they're usually just kind of taking some chips off the table and redeploying those into other investments they think would benefit from long-term high growth potential and would be better held in a non-taxable account with no capital gains. So that's kind of the person that we cater to. So I do say retail individual investor but I think, like maybe a lot of the clients of your listeners, these are not people with, let's say, your 20, 50, 100, 150, 250,000 investable assets, but maybe 250,000 up to 5 million. So that massive, fluent retail individual investor.

Speaker 1:

Okay, so I'm looking at the website as we're chatting. I'm trying to understand sort of the way things work here. So you've got the different categories. Crypto, obviously, is the one that most I think of the younger generation would obviously go towards. Gold skews older A lot of ways to get gold in an IRA just by using ETFs as an example. Use a GLD or some of those. What's the advantage of the way that? When it comes to gold in particular, why do gold through you?

Speaker 2:

Well, it's the same. So there's actually ETFs now that are distributed by the largest players in the game on cryptocurrency, in terms of Bitcoin as well but the people that choose to do it with us, they just like to have that sort of direct contact so they would hold their gold, their gold would be allocated to them inside of a depository that we work with and they own it. So there's no ETF layer. So some people just choose to own individual stocks versus owning them in an ETF. Some people choose to own Bitcoin versus owning an ETF. That's tracking Bitcoin and the same thing with gold for us. So, again, it's people's choices, but we obviously end up getting the people who want to have an account and hold that asset in its pure, direct form, without any sort of in-between person or fund structure.

Speaker 1:

And I guess, the same kind of question when I think about crypto, I think about Coinbase, right. So from a custody perspective, how does that work?

Speaker 2:

Well, so we actually custody the IRA. So in the IRA space, you custody the individual retirement account structure. It's a trust, and some of those assets might be custodied somewhere else. So Coinbase actually happens to be our largest partner. So we have an institutional relationship with Coinbase, who then holds an aggregated portfolio of assets for us on behalf of our customers. So that's a sister company of ours. So actually, the Bitcoin part has become so big that we have a company, we have a sister brand to Rocket Dollar that is specific to the cryptocurrency space, and you asked the question earlier about the ETF and maybe someone might own it in Bitcoin, but we actually have 85 to 87 different coins that trade 24-7 inside of a, a mobile app, inside of an IRA, all the time on that platform. So, again, these are people that want to either have pure exposure to the Bitcoin and or go obviously well beyond maybe the top two, three, four largest cryptocurrency assets right now to trade inside of an IRA account.

Speaker 1:

Is that? Is that your most popular category?

Speaker 2:

It is right now by the number of customers, but actually by dollar amount, since real estate tends to be just chunkier. In terms of dollars. We have about $12 billion overall, but crypto makes up the largest majority by the number of the customers, but by the size of assets. It's actually LP investments into private funds and real estate. Number one and two.

Speaker 1:

All right, so again now, since we're talking about real estate, let's touch on real estate. I have seen plenty of firms that democratize real estate, either in terms of owning a part of a deed or part of the land, or whatever it would be. Talk me through how real estate is done through you.

Speaker 2:

Yeah. So real estate done through us, you can invest in a private syndication, so that's your choice. I would actually probably argue that that's probably a little more akin to own or making an investment into a private fund that just happens to be structured around a real estate asset or project or portfolio of real estate and so forth. But the way people do it through us and that's one of the things about doing IRA accounts the accounts tend to have larger amounts. So we have people that have accumulated, let's say, $500,000 total in an IRA and that IRA was largely due to a rollover of a 401k that maybe concentrated bet on a couple of mag seven tech stocks, and now they're way, way up. So they decided that, hey, I want to take 200,000 of it and I know this isn't in your locality, but this still exists here in, even in the outskirts of Austin. But they may say that, hey, I want to actually own a rental property, um, but use it in my IRA, so they will actually open an account with us and then go purchase a $250,000 property using that IRA account. So now they just have this tangible asset, something that they know and control. There's no debt involved, there's no syndication, so they don't.

Speaker 2:

Instead of owning a piece of it, it's actually easier to own the whole real estate property inside of an IRA and the people do it through us. I mean, the more practical way and I think what you're asking, michael, is that they essentially we give them access to their IRA dollars and we have an IRA structure allows them to access that and they get to operate and use the monies inside of their IRA, similar to for disbursement purposes, similar to a bank account. They can actually go and make that purchase in the name of the IRA for that property. So we allow them to get access to their money, so they can use it as if they had that money in a bank. It's just they have to follow the rules of an IRA and distribute everything. Everything has to come in and out, whether that's rental payments, maintenance costs. Purchase of the property initially has to be done in the name of the IRA for the benefit of Michael.

Speaker 1:

Guyette, and as I'm looking at it, it's fair to say that through Retiredcom you're more ofa kind of intermediary connector firm right from that perspective.

Speaker 2:

Yeah, so Retiredcom is our parent company name, so it owns both brands the Bitcoin IRA and then the Rocket Dollars. So the Bitcoin IRA is specifically designed for people who want to just do. They could either be active or passive, long-term holders of cryptocurrencies inside of an IRA structure, but again, no capital gains. So we do have quite a large number of customers who are pretty active in terms of trading in and out because they can inside the IRA structures. That's on the Bitcoin IRA side, and then the Rocket Dollars, just generally private and alternative investments, for the most part exclusive of digital assets. That makes sense.

Speaker 1:

Talk to me. How do you get the word out? I mean, it's hard to get attention in a world where you've got some of the big players like Coinbase, obviously doing directly a lot of the business development on their end. But you're building up this platform, You've got these multiple sites. You mentioned $12 billion.

Speaker 2:

How do you grow a company like this? Mostly, we've been getting the word out. We've been around for quite a while, so we get a lot of customer referrals. So we do your typical advertising, affiliate marketing. We've actually just begun the beginnings of communicating through the investment advisor and RIA channel as well, because, as their clients are probably talking to them about more exposure into alternative investments, one of the things for us is that we can tell this advisor or this advisory firm that, hey, dollar for dollar, your client can do the same alternative investments with monies that you have a reason to help them capture and bring more assets to you. Let's say, an old 401k that they never brought over from one of their jobs they were at for 10 years. For some reason or other, they've just never brought that over to you and so forth.

Speaker 2:

But we're starting to expand to those channels. But we've been largely direct to consumers. So I just saw that we made another list of top alternative investment IRA platforms and people search these things. They're looking for how to do more innovative things with their 401ks or IRA monies and we know that there's an uptick in interest in private and alternative investments and then even some of the things I just talked about in the article just maybe three weeks ago, was that even some of the large brokerage houses are starting to really develop relationships to deliver alternative investments, like Vanguard working with Blackstone, uh, edward Jones talking about offering an alternative investments platform. So we're just in that ecosystem. We've been there, we've been direct to consumer. But I think this year and going forward it'll, it'll serve us well to get maybe like a little more friendly, a little more known by the investment advisor community. And that's the world I come from, so I feel pretty comfortable navigating that.

Speaker 1:

I know that community very well because that's why my calendar is always so jammed. Okay, so that's an interesting place to kind of get into. So, obviously, financial advisors tend to think in terms of asset allocation percentages, risk profile. Oftentimes since you mentioned being in a wire house bonds used to be considered the uh, the quotes. Conservative investment ended being the most aggressive, given the drawdown that happened in duration, right? How did one think about in the? When you think of the category of alternatives, there are going to be some alternatives that are riskier than others, right? So I'm going to assume that you have to kind of make a distinction among that, also for the advisors. But how should advisors think about the alternatives category, weight weightings and then how to mix alternatives?

Speaker 2:

Well, so the alternatives that a lot of advisors have access to are these ones that I would consider the hybrid. So you're talking about your BDCs, your interval funds, things that are sort of QSIP driven and registered with partial liquidity, so they may not have full liquidity but that partial liquidity. That's probably why their parent firms are allowing them to offer or research them or allow their customers or clients to actually purchase those. So I know that we had talked about that in my space. It's probably the more pure private alternative investments. And I would add a dimension to the asset allocation.

Speaker 2:

I worked as a financial advisor for a really long time through RIA and Wirehouse. So that was 15 years of my working career, which right now is at 24 years. So I've still spent the majority of my time in that space. The dimension that I used to always add was asset location as well. So these alternative investments they have less liquidity. They obviously are not mark to market all the time, so you don't know the return. So they're actually better suited to be inside of these tax advantage accounts.

Speaker 2:

I think if you're an advisor and you're getting clients asking you about them or you're thinking about getting smart on to talk to your clients about it. You might want to consider thinking about adding that dimension, because that dimension allows you to essentially somewhat neutralize that illiquidity. Part of it because investments inside of there need to be held for a long time. So of course you can't get in and get out of that investment inside of the IRA. But the point I'm trying to get to is they can't actually access that money for personal consumption use, so it can't be used for spending. The advisor always gets the call to say, hey, I want to go purchase this new vacation home for my family, or I got a major purchase coming up so I need to withdraw funds from my account. What's the best place to take it from? I mean, obviously the IRA type monies are never even on the table for consideration unless they're over $1,500 and a half.

Speaker 1:

You mentioned the in and out part. I think we're in an environment where people just want to trade and they just want to be in and out, they want to feel like they're in control, commission costs are low and obviously the alternative side. You really can't do that, which is a benefit, I'd argue, but how should the investors that like, or traders who like to think in those terms or act in those terms, how should they think of alternatives? I mean, I think it's hard to get anybody to be a long-term investor now.

Speaker 2:

Yeah, it might be and it's a part of the spectrum. So I would say that, even though people like to trade and even retail investors, even people like myself they like to trade and maybe even yourself. You do it professionally as a portfolio manager. But I would argue that the retail investor doesn't trade everything, a hundred percent of all their investable assets so you even mentioned that sometimes to their benefit, it might be good to not have the ability to go in and out and just hold on to things. I mean, at the end of the day, everyone I know that made a lot of money on the MAG7 stocks didn't do it because they were trading in and out as they were going up. They actually have one period of sustained holding they kind of did.

Speaker 2:

Now they may be in more of a trading mode, kind of playing the ebbs and flows of that market, but you know they didn't. They didn't just kind of trade their way in and out of Netflix on the way up. They typically just held it, kind of believed in that space and understood it. And maybe now AI is the next one and again, that's another part of the private alternative investments too is that it's a little bit hard to access some of what might be the next great technologies, the next great infrastructure, the next great investments, if you're a retail investor, because these investments aren't actually even available publicly until it's already very, very large, and that's something we were talking about too in an email discussion yeah, I mean the access is obviously a big part of that.

Speaker 1:

When we talk about retail, are we talking about high net worth retail? Are we talking about mom and pop, you know 50,000 net worth.

Speaker 2:

I'm always talking, you know. So that's a good clarification question. I think I'm talking about it from the perspective of our customers. So I'm not talking about the mom and pop like 50,000. I'm probably talking more like the massive, fluent retail investors. So I age adjust that.

Speaker 2:

So if you have clients that maybe are on the younger side right, and younger clients that have pretty good assets let's say, 300,000 to 500,000, but they're only, let's say, 30 years old, working in a great tech job, for example, even they not all of them actually want to do everything on their own. They actually want to employ the services of an advisor, to have a good base and a good foundation, a good plan to work off. But they may reserve a portion of that, a percentage of it, to invest in trade as we talk about or explore alternatives through us. Now we satisfied the high active trader side on our Bitcoin IRA platform. I mean, people are very, very active there because you're talking about assets that overall are 85, 87 coins that are available right now move more than the overall stocks right now on an in and out basis for our customers.

Speaker 1:

I'm curious for you with your own personal asset allocation? How much you put in alternatives? What kind of alternatives do you have?

Speaker 2:

Yeah, so I do a lot of alternatives directly. So I've made a lot of angel investments. I'm an LP in a couple of private funds, but then again I have my own sort of like what do they call it? I haven't heard this in a long time but maybe you still hear it in your world. I'm just a little bit somewhat more far removed from the advisor side but that core and satellite strategy. So my foundational stuff is actually still broad market ETFs and that's a large percentage, over 50%. But then I allocate a percent that goes into crypto and then I have a lot of, to be fair, very illiquid right now, not certain of the outcome.

Speaker 2:

I tend not to do ones that pay out in an income stream, so I'm not doing the real estate ones. I'm doing like the direct investments as an angel into technology companies or venture funds and private equity funds right now that are not kicking off income. But that's kind of my mix right now. I mean I live, breathe and eat the alternative investments from a work standpoint. So it's not 100% of my personal investment standpoint, but you know I do like a 65 into a foundational broad market ETF strategy, A lot of buy and hold. Take advantage of all of my taxable and tax advantaged accounts that I have access to, some of which I phase out of. But that's just been my thing. I've been a big asset location, overlaid on top of asset allocation, and I think that's what made me successful as an advisor, made me successful as an RIA and made me think through, like maybe like why there's a space right now for a rocket dollar as a platform, not as a provider or issue of investments directly.

Speaker 1:

I think. The other big challenge of course there is, when it comes to alternatives lack of information around the alternative itself. Now, obviously, you have managers that are supposed to do the due diligence, but Sure, yeah, you might have democratization of access but you may not have democratization of information. So how does that get resolved? Well, again.

Speaker 2:

That's another reason why we've chosen to be the platform. So I describe in the early days of our business that we're a little bit like the do-it-yourself side of Schwab. Now I know that the people who subscribe and watch the LeadLag report we kind of know Schwab more as a dominant provider, as the backbone of the majority more than 50% of America's RIAs. But the average American person who doesn't work in financial services knows them as a discount brokerage shop where you kind of go do your own thing. So that's where we function. So we're not the ones doing the diligence on the managers and although probably 85% or more of our customers are tagged as accredited investors, we don't actually have to get them to attest that with us because they're making those investment decisions independently. We're just giving them access to their money. So that's one of the ways that we have done. It is by virtually being in a spot where we're not there doing the diligence.

Speaker 2:

So we don't function as an RA. We don't function as an advisory group recommending investments. We have no commission structures for any of the people that are featured on our partner page. So there's no money that goes back and forth. It's for the customer themselves to evaluate whether to make that investment or not, and that's what we've done, quite frankly, and I would say that you know you talked about the lack of information.

Speaker 2:

When some people go and look at, in particular, single family rental real estate, you know they're buying these things somewhere in a location where they know about or they have knowledge. So they themselves bring their own particular localized knowledge that not some outside investment advisor, not some fund issuer, is going to give to them. So they're looking for something that is close to them and tangible. I mean, I just heard this in the Wall Street Journal that the stocks themselves, they become a little bit intangible, right, like all money is very like you don't touch it, touch it or feel it. You don't really touch or connect with these stocks anymore. You said you could trade in and out in an instant, right now.

Speaker 1:

Yeah, Very, uh, very good. Good point and interesting. With that perspective, talk me through, um, building a business like this a lot of regulations conceivably that you have to kind of at least consider right, even though you're not an RIA and you're, you know you're acting as a kind of a with the affiliate relationships, but it's, I got to imagine it's not easy to find the right team. I'm kind of going through this struggle myself as an entrepreneur, as I'm building out lead lag media, trying to get the right people involved. How did you find the right people to work with you on this?

Speaker 2:

And do you have outside investors that got you to this place? So, the Rocket Dollar side when I started that, before we joined the Retiredcom family, we were venture-backed, so we had venture capitalists. I had venture capitalists from Silicon Valley that had backed my last startup and actually it was their contacts that helped us get that company acquired by a large major financial services firm. So it was the consumer division at Goldman Sachs that acquired that one and so we did venture funding. But you know, the person I teamed up with was actually a guy that I knew who was a technologist and this is on the Rockefeller side but he actually ran his own sort of mini robo-advisor. So we had actually used to get together in meetup groups.

Speaker 2:

So my prior startup was a, was a robo-advisor and of course I had started a physical RAA. I had been a 10-year advisor. So in addition to having the CFP, I've actually still maintained FINRA licenses, so 7, 66, or 65, 63. So that's when you know you're old school, when you have both of those separate and a Series 24 prior. Then I did that went into the RAA space.

Speaker 2:

I kept those licenses in a relationship that we had with a major brokerage firm, so that allowed me to hold those licenses and through the course of that, when I was thinking about getting into the digital fintech space, I just met people that were this real good mix of technology and interested and qualified and knowledgeable about financial services as well, and he was a technologist who ran this mini robo-advisor through interactive brokers and we kind of noodled on things, talked about this idea and, oddly enough, when you do self-directed IRAs, you actually don't have to register as an RA. You don't have to have a Series 65 to do that, and all you needed was actually an integration partnership with a trust company that was capable and comfortable holding IRAs that held alternative and private investments inside. So the joke for me was that that was the first time in my career that I technically didn't need to have a Series 7 or an RA from the SEC.

Speaker 1:

Isn't that nice.

Speaker 2:

It's not easy to deal with the part of the world, but we have a trust company, so I've learned to realize that that that's just a whole different kind of pain, and at least the other kind of pain I was aware of what it was like before. This is like all new stuff for me, going from like 2020 on. So, uh. So owning a trust business inside of the retiredcom platform is a whole nother beast in and of itself. And again, we have customers all over the place, and the issue we have, too, is that our report of our asset holdings is very, very dispersed. So it's not your typical bell curve with the mag seven stocks with the largest holdings we have. This widespread of people can hold anything and we have some unusual investments. So, if you're interested in knowing, I always kind of think about the most crazy ones we own.

Speaker 2:

I live in Texas. Maybe it's not so crazy, but people own cattle in their IRAs. We have people that own Arabian racehorses, um. And then we have people that just own, you know, rental property around the corner from them, in their suburb as well, and they were buying properties with cash outright. That was one way to do it. Again, asset location right. They were doing the depreciation there. They were getting the income and paying their taxes on that. Now they have a couple of properties to diversify. So their last two properties out of 10 are owned inside of an IRA. So now there's no more income taxes on the rental that comes in, but they have to put that back into the IRA. They accumulate cash. They accumulate enough, they go out and do another private investment and so forth. So it's just a different way of owning. Just like when you own a dividend paying stock inside of an IRA versus a brokerage account, you could choose to have them paid out to you In an IRA. You could accumulate them in cash, but you can't really spend it.

Speaker 1:

What's the next iteration for you, for the company Meaning? Are there other categories of alts that you want to kind of make more at the forefront? Are there new products, services? Talk me through that.

Speaker 2:

Actually, the next iteration for us so I'll speak first on the Bitcoin side is that you know we're developing products. So we had gone through a period where we added a lot of coins. So at some point you get diminishing returns because people aren't really trading the next 20 coins after 85 and so forth. So we're looking at just adding additional features inside of there. So that might be ways to actually have a crypto portfolio inside. So we'll be unveiling some of those later this year.

Speaker 2:

And then on the Rocket Dollar side, oddly enough, we talked a lot about the private investments, but we've had a lot of customer demand and requests for allowing the holding of public investments inside of the same account.

Speaker 2:

So you're going to now have this public private account and the way that the feedback we've gotten that people want to do this is that they actually want to have this large IRA holding in a broad market index or a money market fund and be ready to deploy it into a private deal when it comes up, when something they see that they want to go into or a capital call. If they've made an LP commitment into a private fund, they just want to be able to do it inside of the same account, because right now people always have to bring funds from an outside, more traditional financial services incumbent brokerage account. So we actually are licensed and we have a broker dealer, so and the idea would be to offer additional capabilities in the public space, not to become this end all be all account, but actually just to facilitate the ability for our customers to go between public investments and private investments easier by keeping it all in one house versus having to go from one house to another. So that's the big thing for us.

Speaker 1:

Yeah, I got to give you credit, that's not easy to pull off. A lot of moving parts, a lot of interesting dynamics, also just market-wise, demand-wise, legislation-wise. Speaking about legislation and crypto, let's talk about that a little bit. It seems clear we have a pro-crypto president because he loves having his own meme coin, right, right, I wonder, is there anything on the legislative end, on the government end, that maybe makes the case for alternatives more appealing, anything that, even deregulation-wise, might cause more alpha potential there, I think so.

Speaker 2:

So I think it's less about maybe new rules and regulations that are being proposed that might make it easier, but more of the elimination and now never talking about the ones that did exist towards the end of the prior administration, so around the middle of the prior administration. So let's say, like 21, 22, there were some rules that came out about potentially looking at adding additional sort of penalties, taxes and so forth to private investments and it was pretty scary for the world that I operate in and so forth. So maybe potential changes to Roth IRAs, potential changes to how, like, carry is taxed, but I don't know that there's been like new regulations on the true, pure private and alternative investment space, but less that, there's just been no mention of that. And then allowing the markets to sort of function on their own, like me, for example, one of the things that this is a very, very ancillary thing in the current administration's books, but just their attitudes about, maybe like sort of releasing out to the public the Fannie Mae and the Freddie Mac type of thing, I think.

Speaker 2:

I think that's just a broader harbinger to explain, like what the attitude of the administration might be, which is just to allow the markets to be the markets. And yes, he's a pro crypto president because he's got his own meme coin and that's helped us out on that particular side of it. Helped us out on that particular side of it. He's implemented and positioned people at the heads of regulatory organizations that are making it easier and potentially give comfort to allowing a company that operates in the crypto space, within IRAs, to launch new features. These are things that we talked about two years ago, that we might have been a little bit hesitant to do. That we're willing to do now and try, which includes why we would think about combining the public and private inside of the accounts for the purpose of just making it more flexible and easier for the customers.

Speaker 1:

Of course, one of the big advantages of doing alternatives in IRA is the tax deferral Anything as it relates to tax policy. That maybe changes the calculus when it comes to using alternatives in a retirement account versus a taxable account.

Speaker 2:

Well, the calculus that would change for us is if, actually, they made the tax implications more friendly for owning private investments and then to be less inclined to do it inside of an IRA. The reason why we think that there's a big market to do in IRAs is not always the taxes or the illiquidity and it's a long-term account. It's just that that's where the money's at. So we talked about this offline that right now the US holds $35 trillion of retirement assets. $18 trillion of it is in IRAs. Right now, iras can be opened, moved anywhere.

Speaker 2:

The ironic thing is that people that are investors actually usually have multiple IRAs. Right, they have a Roth IRA that they could contribute to until they income phased out of it. Now they have a traditional IRA. Then they didn't know, so they may have opened up another IRA and so forth. So people roll old 401ks, create different IRAs, so you have individuals. That that's just where the money's at.

Speaker 2:

So when I was thinking about creating the product in the first place, it was that hey, I'm hearing a lot of chatter from the people that I work with in the industry that these alternatives are here to stay. There's really no more micro cap or small cap investment market to speak of, because private equity allows the companies like an open AI, which open AI and SpaceX were the debut in the S&P 500. They're not starting at 499, clawing their way up from the Russell 2000. I mean, they're going to start in the top 50, 25 at this point if and when they go public. So there's just no opportunity for investors to get into that right now. So for me, I just thought that providing an IRA platform that could go into alternatives was actually just tapping into this giant bubble of money that might be looking to go some other places besides the 3,776 publicly traded stocks of which the market is dominated by maybe seven or eight of them.

Speaker 1:

Yeah, no very well articulated on that end. What are we not talking about? You think that's important. When it comes to alts, Again I go back to I think a lot of people don't quite understand the value of alts, especially when you are towards the tail end of an extended bull market for passive equities. What's missed by the retail community, I think?

Speaker 2:

what's missed is that you know right now, the industry itself and I'm talking about the traditional industry, not the part that we function in here at Retiredcom and Rocket Dollar and Bitcoin IRA but the industry is working really, really hard to catch up. So we've heard for years about this democratization to create broader access to go into private and alternative investments, and we haven't made a lot of progress in that. So if this industry catches up they create more accessible platforms that are then understood and the advisors who can talk to clients about this are knowledgeable then you're going to get just a broader disbursement of retail or individual investor money that's able to go into these private and alternative investments, at which point that's going to spur the need for better reporting, better oversight, and it wouldn't make these alternative and private investments less. I think it actually improves the market when information becomes more and more available. So I think the industry is working really really hard to catch up right now.

Speaker 2:

I think there's a big space. If someone really were able to crack the nut finally and do like an actual, true, like sort of data layer that you could really report on the alternatives right now, because that's the part that's missing. That's hard for us. So you know, right now people that are doing purely off-platform, one-off investments, they actually kind of have to like just show us some sort of self-reporting way so we can value that IRA for them. So a property, so that might be from the tax records of the municipality the property exists in. You know, that's not something that we could just scrape into the IRA right now.

Speaker 1:

For those who want to learn more about retiredcom. You want to, just in general, get more information. Where would you point them to?

Speaker 2:

Yeah, so I'd tell them that the retiredcom is more of an informational site. But as far as learning about and opening the accounts, talking to your clients or looking at it for yourself I mean, we have tons of advisors or clients as well, myself included just people in the financial service space go to rocketdollarcom or bitcoiniracom and just see and know that overall we're at $12 billion overall across both brands. We have an integrated trust company. So I mentioned earlier about an outside trust. We're not doing that. We actually own the trust company.

Speaker 2:

So we custody all of the IRAs in-house within our platform and you can learn a lot. There's a lot of information, there's investments you can go into, you can open the accounts, you can monitor. On the Bitcoin IRA side, it's actually available on Android and iOS apps as well, so that's obviously our more active trader part of it. And then my team. If people are interested too, there's a phone number on there on the upper right, so we have a 1-866-ROCKET-D phone number and we answer that during normal business hours, central standard time. We're based in Texas. On that side of our business. We can answer your questions about alternative investments, iras and so forth and just how these accounts work, and we even created a coupon code as well. So if people decide to go do that, you can put it in the show notes. But we created one called Lead Lag 25, and we'll give you the information as well, michael. So it's there to give those people $100 off of the signup for the account.

Speaker 1:

I will definitely put that in the show notes. Now that you told me that, I appreciate that you watched this live, learned more about Henry Ushita's various businesses, retirecom and again, I'm a big fan of alts. I just think we're likely in a cycle now that favors them. There's a tailwind for things outside of passive beta, because everybody's bet on passive beta and alternatives have been right, increasingly kind of the, the underinvested, uh, asset class right. It's the satellite, I think, which should be a bigger satellite than than other times in history.

Speaker 2:

Well, there's a lot of satellites that physically actually go over us now. So satellite you've heard like you know, a small part, but now there's like it'd be hard to like start flying rockets in about 20 years about actually hitting a satellite that is true.

Speaker 1:

That that is true. Appreciate those that watch this live. Again, this will be an edited podcast under LeadLag Live and I'll see you all on the next episode. Thank you, henry, appreciate it All, right.

Speaker 2:

Thank you, Michael Cheers, everybody.

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Michael A. Gayed, CFA

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