Guidant Financial Group Blog

Rollovers for Business Startups (ROBS) are helping to create businesses that in turn create jobs.
ROBS are here to stay.

By: David Nilssen, Cofounder of Guidant Financial

Guidant Financial held its annual party at the Museum of Flight on January 29, 2011, in Seattle, WA. We celebrated a year of tremendous growth (up 30%), applauded our clients’ successes and recognized the team members who made—and continue to make—Guidant a company we’re proud to say is “ours.”

In my closing comments, and inspired by the Museum of Flight, I found myself talking about the Wright Brothers and how they changed the world forever. While historians acknowledge they weren’t the first to fly, they are credited, however, with launching an industry that has changed the way we travel, do business, communicate and socialize forever. Early on, skeptics said that commercial flight would never be popular or successful. History (not to mention my frequent flyer card, which racked up over 150,000 miles last year) has proven those skeptics wrong.

The story of Guidant shares parallels with the story of the Wright Brothers. While Guidant was not the first company to help individuals invest their retirement funds into a small business or franchise, we have, however, become the largest provider of such services and are changing the way people fund a business. Early on, skeptics said that large numbers of people would never invest their IRA or 401(k) into a business or franchise, yet we have helped more than 5,000 people in all 50 states invest more than two billion dollars through Rollovers for Business Startups (ROBS) . . . and that amount keeps growing.

Just as skeptics once warned that flying was far too dangerous, so too, skeptics today warn that investing retirement funds in one’s own business is far too risky. To be fair, flying does have its risks, although far fewer than those associated with riding in a car or eating double cheeseburgers every day. And any investment or business startup also has its risks. But Guidant’s census data demonstrates that a franchisee or small business owner who launches their business with an IRA/401(k) investment has a 63% greater likelihood of success than a small business owner using traditional funding.

We don’t claim to know all the reasons for this advantage. What we do know is that a majority of our clients buy their business in cash and do not tie their credit or other personal assets to the transaction. This means they don’t have to service debt payments and are significantly invested into the company. It means they don’t have to jeopardize their home or pay high interest costs. It means they start out with more capital to spend on advertising, equipment and hiring the best employees.

In today’s economy, ROBS transactions are helping to create businesses that in turn create jobs. ROBS are here to stay.

Before I continue, let me take a moment to acknowledge the elephant in the room: ROBS is a horrible acronym! Here at Guidant, we prefer to call our ROBS transaction iFinance. This product name expressly describes the individual’s participation in funding the transaction with their own money, and it speaks to the sense of empowerment that accompanies this funding strategy.

ROBS transactions generally involve five steps which, although complex, can be completed here at Guidant in less than three weeks:

1. A C corporation is filed in the state of business 
2. A 401(k) is created that explicitly provides for the purchase of this type of corporation stock
3. The client then rolls up to 100% of their eligible retirement funds into the newly created 401(k) plan 
4. This plan, in turn, invests in the stock of the new corporation 
5. The corporation, now flush with funds, acquires a small business or franchise

There are many reasons why an entrepreneur would choose to invest in their own business. These reasons may include, but are not limited to:

• They believe a small business they own and control is the best investment for their retirement plan
• This strategy can provide a debt-free equity injection for their enterprise
• By creating a 401(k) plan, they have access to a wealth-building tool and can provide their employees with a benefit rarely seen in American small businesses today

In 2008, the IRS circulated an internal document called “Guidelines Regarding Rollovers as Business Startups.” In it, they were critical of how some companies promoted such funding vehicles and how some individual business owners operated them. We share their concern. There are many ways that an entrepreneur can put their plan at risk. The good news is that those risks can be significantly reduced by working with a financial firm knowledgeable about and experienced in ROBS structures.

More good news is, this document also acknowledged that this type of structure was not “per se” non-compliant. Let me explain: When properly structured, there is no question that it is legal to invest retirement funds into a business. It is not a loophole or a tax shelter. Guidant provides recordkeeping services to thousands of small business clients. Since 2008, ten of our clients have been audited (Ironically, this percentage is even lower than the average percentage of new businesses in the U.S. expected to be audited annually) and all ten have received “no-action” letters from the IRS. This means that the IRS examined the client’s investment structure yet chose not to take any action against the setup. Why? The Employee Retirement Income Security Act (ERISA) gives explicit permission to make such an investment when it is structured correctly, operated in accordance with the law, and utilizes stringent compliance measures.  Guidant’s commitment to these high standards is paramount.

In 2008, while the IRS informally released their position in the “Guidelines” document, we anticipate that the Department of Labor will also opine on ROBS in the future. Guidant continues to work with our legal representatives and congressional allies to ensure that Rollovers for Business Startups remain a viable and safe way to invest in one’s own small business or franchise. In 2010, Guidant invested nearly a half-million dollars into telling the stories of the tens of thousands of entrepreneurs who opened businesses with ROBS transactions and created hundreds of thousands of American jobs. 2011 will be no different.

You, too, can expect to hear more from Guidant. A big part of our work at Guidant is to educate the public about the benefits and drawbacks of nontraditional small-business financing. This includes keeping you, regulatory agencies, small business, the franchise industry and potential clients up-to-date with accurate, up-to-date and unbiased information about ROBS.

Remember the old carnival game of throwing darts at a board covered with balloons? I loved the exhilarating sound of that pop! when my dart burst the balloon, revealing my prize. Whether through innocent misconceptions or intentional misrepresentations, plenty of “balloons” are floating about these days filled with lots of hot air and inaccuracies about ROBS. I’ve always been a bold carnival game player, and like that kid standing in front of a wall of balloons, I’ve got the dart and I’m eager and ready to take aim.

You’ll be hearing from me again.

At Guidant, we pride ourselves on our connection with our community. Over the last several years our employees have participated in numerous local, national and international charity events. Never before, however, have three of them fallen on one weekend!


Recently, Guidant employees had the joy of participating in the Susan G. Komen Race for the Cure, a Miracle League baseball game and presentations by young social entrepreneurs with Youth Ventures.

Although three philanthropic events in one weekend may sound like a lot (and it is), for many Guidant employees it was one of the best weekends of the year.

“We started attending the Susan G. Komen Race for the Cure after one of our employees, Susan Brunk, was diagnosed with breast cancer,” says Guidant CEO Jeremy Ames. “Four years later, she’s a survivor and an inspiration to us all. We continue to attend the walk each year in support of her and the millions of other courageous women who have been diagnosed with breast cancer.”

In Seattle, more than 13,000 men, women and children participated in the Race for the Cure and, even though we have participated for several years, watching that many people walk for one cause is still breath-taking.

“This race and walking with my Guidant team is something I look forward to every year,” says Guidant employee and cancer survivor Susan Brunk. “It is awe-inspiring to see tens-of-thousands of people walking for the ‘cure’ and having so much fun. As a cancer survivor, participating in this race and walking in the Survivor Parade is one of the highlights of my life.”

Following the Race for the Cure, Guidant employees had the pleasure of playing baseball with several “Miracle Leaguers.”

“I feel great when I see these kids out there laughing and having fun,” says Guidant Consultant Troy Brockway, who introduced the company to Miracle League. “One of the most rewarding things about this program is how excited these kids get when everyone is cheering for them. A majority of the time these kids are the ones that are left in the stands watching siblings or friends be the players on the field, but on this day they get to be the ones playing and cheered for.”

Guidant Financial Group's offices are closed today but we will return tomorrow. We wish you all a happy New Year!

BusinessWeek had another article this week that piqued our interest (yes, they are our fave at the moment). This one had to do with the most profitable start-ups in 2008. And when we say "profitable" we mean "venture-capital worthy." Not exactly the same thing - but close.

Actually, not even close. Remember those dotcom days? Venture captial did not really mean profitable during those years, but we are thinking they've learned their lesson and are diversifying a bit more.

Or not!

BusinessWeek's list of Venture Capital's Favorite Startups seems to have the same undeviating focus on certain industries as it did in 2000. Let's see what made the list:

- Biotech
- Technology
- Pharmaceuticals
- Medicine and Medical Research

Hmmmm. We see computers and doctors. Looks to be about it!

So! What about the rest of us out there who need capital for our business start-ups? Well, we have some great news for you!

Guidant has expanded its services to include Unsecured Loans, Equipment Leasing and SBA Loans. Yes! You can now explore your options for several different forms of financing in one place!

Of course, our most popular financing method is 401(k) Small Business Financing; however, we have heard from our clients and partners that additional options can help make the difference between realizing your dreams and, well, just dreaming.

To learn more about our new financing options, call in and ask to speak with one of our Client Coordinators. They can find out more about your situation and schedule a time for you to speak with one of our Senior Consultants or other financing experts about the financing options that may best meet your needs!

Call us at 888.472.4455.

Happy Holidays from Guidant to you!

It is currently snowing at Guidant's Seattle (well, Bellevue) headquarters!

Our offices are officially closed due to hazardous road conditions, but we are checking the company voicemail regularly and many of our employees are working from home (at least that's what they tell us).




Keep it coming! It's a nice change-up from rain!

BusinessWeek recently featured Guidant in an article about 401(k) Small Business Financing (See Need a Loan? Tap Your 401(k), Without Penalty).

In the article, reporter Brian Bunrsed talks to two 401(k) Small Business Financing clients and explores the opportunity to finance a business venture with existing retirement funds.

Guidant clients Tim and Terry Madden told Burnsed that they decided to use retirement funds because they "didn't want to rack up huge piles of debt in a turbulent economy," even though they qualified for a traditional loan.

Many prospective clients are in the same boat as Tim and Terry. While there are still loans out there (yes, really!), the terms are not nearly as attractive as they once were and, for many people, investing in their own business provides the opportunity for greater gain than investing in the stock market.

As with any business, there is risk. What is unique about 401(k) Small Business Financing, though, is that it caps your risk at a specific amount. What many financial experts don't realize - or don't want to realize - is that using retirement funds can actually be less risky than a traditional loan. While there still is the possibility of losing the business and your retirement savings, many people would agree that this can be a more attractive risk than losing your business, still owing the bank principal plus interest, and having to declare bankruptcy and suffer the mark on your personal credit for 7-10 years.

Don't get us wrong, 401(k) Small Business Financing is not for everyone. But, as you can tell from the 16 comments and counting on this recent BusinessWeek article, there are still a lot of skeptics out there who haven't truly compared 401(k) financing with other vehicles.

This is a viable, allowable and logical way to finance a business. And in times like these, why not investigate all your options? Your 401(k) may really be the source of your future financial freedom.

Want more information? Call us! 888.472.4455.

We announced today that current numbers are projecting a 30% increase in self-directed IRA accounts opened with Guidant this quarter. This is over fourth quarter 2007.

This is pretty exciting news for us as, like most other financial companies, we weren't sure where we would end up the end of this year.

Not surprisingly, though, it appears that Americans are taking this economic downturn as a sign that having a retirement account that allows for more control over what they invest in, and how those investments are managed, is a more attractive alternative to trusting their financial futures exclusively with Wall Street money managers.

For more on this, please read our press release on Yahoo! News (see Self-Directed IRA Accounts Growing at a 30 Percent Rate).

Guidant Financial Group is the leader in self-directed IRAs. We have earned this recognition by keeping our company focused on you – our client. We truly believe that if you are successful, we will be as well. One way we ensure our clients' success is by having an in-depth understanding of how our clients intend to invest their IRA funds. Guidant’s compliance standards are the highest in our industry. Each client transaction goes through four levels of compliance. We spare no expense in ensuring our clients can invest safely, with peace of mind.

Guidant’s senior consultants were recently asked to share some of the most common mistakes prospective clients propose to do with their retirement funds on our first consultation. Many of these are simple mistakes or misinterpretations of the law; others are an attempt to get around rules of which the prospective clients are well aware. Attempting to circumvent rules and guidelines of the IRA plan can put your retirement account at serious risk. A $1 mistake can jeopardize the entire IRA. With so many great ways to make a healthy profit, the risk involved with prohibited transactions is not worth any return.

Regardless of whom you entrust with your self-directed IRA business, please use these guidelines to help you on the road to phenomenal success.

Mistake 1: They inadvertently make personal guarantees.

You, as the individual holding the account are considered a “disqualified person” and cannot provide a personal guarantee of IRA debt. In order to obtain checkbook control of retirement monies, Guidant (and some other IRA providers) allow the retirement account to invest into a newly formed LLC. Let’s say you go into the bank to set up that LLC checking account and, in the process, the teller asks, “Would you like a credit card for this account?” You may think, “Well, I’m surprised they’re offering a credit card, since the LLC is an entity that was just formed yesterday, but if they’re offering a credit card, sure--why not?” So the teller establishes a card and gets you to sign the application, and the bank authorizes a new card based on your credit history. Bad move: You just stepped into Mistake #1. The problem is that you’ve just personally guaranteed the LLC’s debt and repayment of it. The mere execution of that personal guarantee constitutes an “extension of credit” and, hence, is an automatic prohibited transaction even if the guarantee is never exercised.

Mistake 2: The IRA owner attempts to make a contribution to the IRA by depositing it directly into the IRA/LLC checking account instead of going through the IRA custodian.

In essence, if you make an annual contribution directly rather than through the IRA custodian, you are personally interacting with your IRA/LLC. That is considered a prohibited transaction.

Mistake 3: The IRA owner personally enters into a contract on real property they intend to purchase with their IRA funds.

Many investors wait until they find a property in order to engage the services of an IRA custodian or facilitator. Unfortunately, in doing so, they often suffer from” opportunity loss” because 1) a self-directed IRA typically takes 30 days to establish, and 2) they are not allowed under the prohibited transactions code to use personal assets for the benefit of the IRA. For example, let’s say you find a great piece of rental real estate you’d like to buy as an IRA investment. If you have not already established a self-directed IRA account, you may lose out on the deal because you don’t have immediate access to your IRA funds and you cannot personally deposit your own earnest money or enter into a purchase agreement. Remember, the IRA needs to buy the property, not you.

Mistake 4: They assume no UBTI applies to passive investments into an operating business.

Unrelated Business Taxable Income (UBTI) is generated when an IRA engages in “business activity.” If generated, the IRA has to pay Unrelated Business Income Tax, or UBIT. Oftentimes an IRA owner wishes to passively invest in a business entity, but the business activity itself is not passive. Should that investment be made in a pass-through entity, such as an LLC, the IRA could generate UBTI on any profit derived by the business' activity.

Mistake 5: Self-directed IRA clients use personally-owned assets for the benefit of the IRA.

For example, the use of a personally-owned bulldozer and construction equipment to develop IRA-owned property would constitute a prohibited transaction. There are multiple layers of problems with this scenario: There’s using the personally-owned assets as well as contributing “sweat equity.” These constitute a de facto contribution that would bust the contribution limits. Another great example of this is a self-directed IRA investor who buys a rental property to use as corporate housing and furnishes it with their own furniture. This is a prohibited transaction.

Mistake 6: They believe that transactions with a non-disqualified party cannot be prohibited transactions.

This is a common belief that simply is not true. You, as the IRA holder, have a fiduciary responsibility to do what is in the exclusive benefit of your IRA. For example, an IRA holder could purchase rental real estate and allow a brother and their family to occupy the property. That would not necessarily be a prohibited transaction, but it does stage the potential to violate the exclusive benefit rule if the rent was not set at fair market value and the terms of the property agreement were not enforced. If the IRA owner has a tenant who is not paying rent, the IRA owner has a fiduciary responsibility to act as a prudent investor would and begin the eviction process. This could be problematic if you have family occupying the property – it creates a conflict of interest for an IRA owner. Not acting in the best interest of the plan could result in a prohibited transaction.

Mistake 7: The attempt by the self-directed IRA holder to take a real estate commission on property purchased/sold by the IRA.

If the IRA owner is a real estate agent, they cannot receive a commission on the buying or selling of their IRA property. You cannot take personal compensation from any self-directed IRA investment.

Mistake 8: The self-directed IRA enters into a de facto partnership in which it loans money to a developer, and instead of making a loan attached with interest and payments, it takes a share of the profits.

Although this is allowed, it’s a de facto partnership that will generate Unrelated Business Taxable Income (UBTI). This wouldn’t be an issue if the IRA lent the money for an interest rate (what the market bears) and created a monthly payment schedule. But in this profit-sharing scenario, it’s simply disguised equity that is dressed up to look like a loan.

Mistake 9: Two self-directed IRA holders engage in a quid pro quo partnership to utilize their own retirement funds.

For example, say each person has $100,000 in a self-directed IRA. Each then makes a loan to the other for $100,000 to pursue personal investments. These loans are dependent on the other lending the money and could be viewed as using one’s own retirement funds for personal benefit.

Mistake 10:Self-directed IRA holders attempt to “disguise” active investments that can generate UBTI.

Some self-directed account holders will place an ad in the newspaper to supposedly show their intent to rent an IRA investment property, but they “conveniently” can’t find the right tenants, so they use this as an excuse to sell it. They think this will avoid UBTI because the intention was to rent the property as a passive investment. Besides being ethically questionable, this scheme will not change the result at all. Even if it were true that the IRA holder originally intended to rent the property rather than turn around and sell it, the case law says that the most dominant factor is the purpose at the time of the sale, not at the time of the initial purchase. So you can have a perfectly passive non-business purpose going in, but if you change that purpose such that at the time of sale it is a business-type transaction, you will face UBTI.

Self-directed IRA investing can be exciting, secure and profitable. There are a vast number of allowable investments available to self-directed IRA holders that offer both profitability and security. Call a Guidant Financial Group consultant today to discuss how you can safely invest your retirement funds into potentially more secure and more lucrative investments today!

In the spirit of the holiday, we decided to highlight the ghoulish businesses that some of our clients considered.

When they tell you that there is a franchise for just about every business concept out there … they aren’t yanking your chain!

In August, NuWire Investor highlighted the five most unique franchises they could find (see Franchises for the Eccentric Entrepreneur). Guess what number one was?

1-800-AUTOPSY.

Yes, really. 1-800-AUTOPSY. According to NuWire:

“This franchise is exactly what it sounds like it is: a stand-alone service that performs autopsies. The company was founded by Vidal Herrera in 1988 and began as a one-man operation (no pun intended). 1-800-AUTOPSY franchises offer a variety of services, including toxicology and post-mortem DNA analysis, tissue procurement and, of course, autopsies. Clients include families who want private autopsies performed on deceased loved ones, malpractice lawyers seeking evidence for a trial and medical examiners, pathologists, and schools who need extra assistance."

If a private enterprise is more your style, you could always purchase a lot of land and open your own cemetery. With our ageing population, finding a desirable plot to spend the rest of your afterlife could be as difficult as finding a rent-controlled apartment in New York City (or so we hear). Additionally, there is always the opportunity to expand your services – casket sales, mortuary services and funeral services are all viable add-ons for this ground-level (or under) enterprise.

Interested in learning more? Check out another NuWire gem, Cemeteries: a Grave Business.

If real dead bodies aren’t really your thing, you can always get into the Halloween business. Like any other holiday, Halloween is a potential money-maker. One of Guidant’s existing 401(k) Small Business Financing clients used his skills as a professional ghost hunter to start a business in the Halloween industry (known to industry-insiders as the “fright” industry). He is currently planning a Halloween Expo for 2010 that will include all kinds of frightful vendors and even a zombie walk!

We hope you and your family have a safe and happy Halloween – and remember, it doesn’t have to end! At least not if you have a 1-800-AUTOPSY franchise!

In this time of economic turmoil it is extremely rare to hear of a financial company experiencing recognizable growth. As rare as it may be, Guidant was, in fact, acknowledged for its growing power at last night’s banquet for the 100 Fastest-Growing Private Companies in Washington State, put on by the Puget Sound Business Journal.

For all of our existing clients in the state of Georgia, we bring you important information regarding a potential scam.

An entity calling itself Georgia Corporate Compliance has been mailing offers to Georgia corporations to complete corporate meeting minutes on behalf of the corporation for a fee. The Georgia Secretary of State generally does not require corporations to file corporate minutes with the State, thus attaining their services is an unnecessary expense.

The most concerning part of this potential scam is the way in which the offer is presented.

“First, the solicitations are presented in a form similar to forms sent out by the Georgia Secretary of State’s Office,” reported the office in a January press release. “Second, the solicitation includes an official-looking seal. Third, the solicitations contain a limited response time. Although the solicitation contains a disclaimer stating that Georgia Corporate Compliance is not affiliated or endorsed by any government agency, many customers have been understandably confused by the official-looking documents.”

The Secretary of State issued a press release earlier this year regarding this matter. To view the full release, click here.

While this has been an ongoing issue in Georgia for almost a year, with year-end filings quickly approaching, we want all our clients to be aware of this potential scam. If you have received any unsolicited offer to provide services for the filing of corporate documents, we encourage you to check with your Secretary of State to ensure that the services offered are, in fact, required.

For those who may have already acquired the services of Georgia Corporate Compliance, the Secretary of State assures that this will not affect their corporate filings, “either positively or negatively.”

Guidant Financial Group-Not a Scam

There is no doubt that the world is feeling the effects of the current economic climate. The credit squeeze is putting pressure on many people and businesses. Today we are hearing Warren Buffet is investing billions, while at the same time, Jim Cramer says to take your money out of the market if you need it in the next five years. There are reports that suggest a recession, maybe even a depression. With so much “noise,” how will you ever know what to do?

Please join Guidant Financial Group’s CEO for a webinar to hear how today’s economy is impacting self-directed investors. Stephan Roche, CEO of Amplio Corporation and Jeremy Ames, CEO of www.NuWireInvestor.com join Mr. Nilssen in a discussion about cutting through the noise.

Cutting Through the Noise
Simple explanations to make sense of today’s uncertain economic climate.

Date: October 21, 2008
Time: 10:30a – 11:30a PST

REGISTER NOW by visiting: https://www2.gotomeeting.com/register/770160580

In this presentation you can expect to hear about:

* whether the U.S. is heading into a depression;
* how the $700B rescue package could affect the economy;
* what Guidant is doing to adapt to the changing market;
* how self-directed investors could be affected by these issues;
* investment strategies for volatile and uncertain marketplaces; and
* the recent investment trends displayed by Guidant’s clients.

Also, hear how some individuals are opening a checkbook control self-directed IRA at NO CHARGE through www.freeselfdirectedira.org.

Our goal has always been to ensure you have the support you need to be successful. We believe that, when armed with the right information, tools and opportunities, people can make the right wealth-building decisions for themselves.

REGISTER NOW to ensure your participation in this timely event.

Need more information? Call us toll-free at 888-472-4455.

The Wall Street Journal published an article today about the growing trend in self-directed investments for retirement accounts (see When Stocks Tank, Some Investors Stampede to Alpacas and Turn to Drink). The reporter, Jennifer Levitz, explores some of the unique investments people have directed their IRAs into - believing that these investments, although outside the box, will provide more stable and lucrative returns.

Tim Boykin, a Guidant client since July, was highlighted in the article for his self-directed investment into a construction company in Lima, Peru, which is currently erecting condominiums. Tim's sentiment toward alternative investments is very similar to that of the prospects we have been getting calls from over the last few days.

"I can see pictures of the land. I can see steel. I can see people working," he told Ms. Levitz. "When I put my money in a fund, I see a big list of things that don't sound good."

As the article points out, many investors are now wary of the stock market. The reality is sinking in that you don't really know what you're investing in when you buy a bond or invest in a fund. Conversely, real estate, an alpaca farm or even a parking space are investments that epitomise the old adage "what you see is what you get."

It is true, as the article mentions, that panic can lead to unwise decisions. And unfortunately some questionable investments are being hawked at wary IRA holders. Everyone should always think very carefully about what they invest their money into but, as the article points out, self-directed IRAs open up a whole new world of (sometimes more stable) options.

The reality is hard to face: The country has been hit by a severe economic calamity. We know this not only by depressing media reports but by the number of calls we’re receiving from worried clients. Please be assured that we are here to support you in any way we can during this crisis.

Even though credit is extremely tight and the financial stability of some of our favorite companies and institutions is “iffy,” Guidant offers you options that could be particularly useful at this time.

To help you face the crisis armed with good and reliable information, below are some of the most common questions we are hearing from clients, along with our answers to them. As always, we are available at any time to aid you in understanding your opportunities (and challenges) and to offer insights that will help you weather this economic storm.

Q. I was getting ready to roll my funds into one of your products, but now my account isn’t worth as much. What should I do?
A. Many people are simply choosing to wait until the turbulence subsides before making any moves with their funds. This, however, begs the question: Is the potential loss or gain of staying put greater than the potential gain of rolling your funds into a self-directed vehicle? Although this is a question that only you can answer, here are two important factors to consider:

• Through a Guidant self-directed IRA LLC, you can take advantage now of investments like foreclosures, property auctions, and hard-money loans. These have a reputation for being solid investments during recessionary times. Every day we hear the stories of clients who are growing their retirement accounts by purchasing foreclosures at incredible prices or assisting friends and small businesses with personal loans.


• The matter of personal control is another important consideration. No matter how the markets are behaving, if you don’t choose your own investments, then those choices are made by others – oftentimes by firms or institutions that have little or no concern for your financial welfare. Whether you use a self-directed structure to invest your retirement funds into alternative investments or into a small business you own and run yourself, the success or failure rests completely with you.

Q. Should I start a small business at this time?
A. If your goal is to own a business, you may find that now may actually be the best time to use your funds to buy your own business via our 401(k) small business financing solution. Predictions are that credit will be significantly harder (maybe even impossible) to secure in the near future. SBA loans, home equity lines of credit, unsecured loans, bridge loans – all debt-related products – may soon be unobtainable. Consequently, if you are planning to use your retirement funds as a down payment on a loan, those funds may go farther now rather than later. Additionally, we are hearing encouraging reports of Guidant clients who are buying existing businesses at greatly reduced prices from overextended owners eager to sell their enterprises.

Q. I already own a small business I purchased through your 401(k) financing vehicle, so how will I be affected?
A. By using Guidant’s 401(k) small business financing plan to buy/invest in your business, you have already given yourself extra financial security. By using your own funds to buy the business, you will not have to worry about a lender closing your line of credit, raising your interest rates or demanding early payment. This also means that (in the worst scenario) if your business fails, your personal credit will not be affected.

Q. I’m in the midst of setting up my Guidant rollover accounts, but my bank looks like it’s going under. Should I roll my funds into a temporary IRA?
A. If this is your situation, call us immediately. Rolling your funds into a non-Guidant IRA/401(k) could delay your funding process by several days or weeks because we would need to begin the setup process over again. We will work with you to find a solution that will serve you and your business goals best.

401(k) small business financing made the Small Business section of the New York Times today (see Betting Your Retirement on Your Startup). Although we do think the title is a bit misleading (you are always betting something on your startup - whether it is your life savings, your home or your familial connections), we do see this article as a great resource for anyone looking to start or purchase a business.

And prominantly featured in this story is Guidant's own client George Richards, owner of Darwin Liquors with his wife Marlies. George has been a Guidant client since 2006 and is still happy he decided to use retirement money to finance his own business. As he told the New York Times, "I would bet on myself and my abilities any day,” he said. “I don’t know who I’d rather bet on than me.”

We know that right now is perhaps the most unstable time in the history of the American economy. With that comes uncertainty about all things financial. The New York Times recongnized that and sought us out for examples of people who used our 401(k) small business financing solutions to invest in themselves (and not the CRAZY stock market) and to side-step the volitile lending environment (at least partly).

Even though you may be seriously reconsidering your entrepreneurial goals, know that Guidant has options for you that could not only provide you with the capital you need for your business, but that could provide you with a way to invest in something you have control over - your own business.

Despite housing market woes, most of Guidant’s self-directed IRA investors are making few significant changes to their current lineup of investments. In fact, in a recent survey, 86% indicated they have not made any major changes to their investment portfolio due to the mortgage crisis.

We know from other surveys that the majority of our self-directed IRA clients are involved in long-term investing and broad diversification of assets. So, it’s reasonable to surmise that, when the housing bust hit, they were already in pretty secure positions, especially since their real estate investments were primarily long-term ones.

Another fact that may influence our clients’ tendencies to stay the course is that Guidant’s self-directed IRA lets investors acquire both traditional and alternative investments via checkbook control. This means account holders can move easily from stormy markets into more tranquil ones as the economic climate changes.

Like every other financial institution in the country, we have received many, many phone calls over the last few days from concerned clients about the current economic meltdown and what they should do next. This is a very unique period in the history of the global economy and many, if not most, investors aren’t quite sure exactly what to do.

Case and point: Our concierge department has been bombarded by calls from existing and in-process clients who are concerned about the banking institutions that currently hold their funds. Conversely, our sales team was busily answering urgent phone calls from stock-market investors who want to get their money OUT.

While no one knows with 100% certainty what is going to happen with the financial markets, we want to assure our clients and prospective clients that a self-directed IRA with Guidant is a great option during this tumultuous time.

Our self-directed IRA offers a level of flexibility that no other retirement account can provide. Because of the LLC structure, Guidant clients have the ability to choose what banking institution they want to keep their money with. Additionally, since the funds are held in a business checking account, the LLC (just like any other business) can move its funds to another bank at a moment’s notice.

In addition, Guidant’s real estate IRA clients have the ability to open accounts with multiple banks, so they can keep less than $100,000 in each bank account. This means that, if there were a run on the banks and if they needed to take advantage of FDIC insurance (up to $100,000), they wouldn’t have more than the maximum insured amount in any one account.

The likelihood that a bank should collapse and a person’s funds could be diminished substantially is fairly low. And even if a bank should face the worst, the current trend predicts that most of these institutions will be bought out before they actually go bust – like Washington Mutual. Since JPMorgan Chase has bought out the failing institution, it has also assumed the liability of insuring the remaining balance of any Washington Mutual account over the $100,000 insurance limit.

Furthermore, since the purpose of having a self-directed IRA is to be able to make self-directed investments, most Guidant clients will have their cash in real estate, private loans, tax liens and much more - not in a bank account.

We understand that this is a difficult time, so we encourage everyone to be extra cautious when making their investment decisions. However, with a self-directed account come self-directed investments – meaning you get to decide the amount of risk you choose to take.