Recently I was having a chat with one of my coaching clients and It struck me like a ton of bricks landing on my head. I need to make sure you understand FULLY that you have a fiduciary responsibility to your investors.

This one is important, so pay attention!

Recently I was having a chat with one of my coaching clients and It struck me like a ton of bricks landing on my head.

I need to make sure you understand FULLY that you have a fiduciary responsibility to your investors.

While I won’t go into detail about the conversation I had with my client that opened my eyes, I will say that it was enlightening.

It became clear to me that I need to get you to do more research into your responsibilities when you’re out there talking to investors and getting them to let you use their cash and credit in your deals!

So here goes… let’s back up for just a minute.

A lot of private capital comes from retirement plans. If you’re working direct with the plan holder, the investment can be fairly clear cut.

Because I am not a financial planner, a tax guy or your CPA, I’m not going to give you any type of legal advice here. I will first send you over to a webinar that I did with Kaaren Hall of UDirect where she walks you through the self-directed IRA investment and how that works.


From there it can get a little trickier.

For example, you will work with “fiduciaries” of “qualified plans.” If you don’t know what that means, look it up. Here’s a quick link: https://www.investopedia.com/articles/08/fiduciary-responsiblity.asp
A fiduciary is responsible for making decisions for someone else’s retirement plan. Click To Tweet

What you’ll learn in this short article is that there are four steps in the process:

  1. Organize
  2. Formalize
  3. Implement
  4. Monitor

In short, a fiduciary is the person responsible for making sound financial decisions regarding someone else’s retirement plan. Like the offspring of a mother or father who is longer capable of making their own investment decisions in regard to their retirement account.

The son or daughter is then responsible for managing the “qualified plan” and has to offer all options available, including real estate as investment vehicles.

It can get complicated…

When there are other siblings involved, because they all share a stake in the overall estate of the parent or loved one, things can get out of hand pretty quickly.

For example, let’s say a disgruntled sibling starts point fingers at the fiduciary, saying he/she didn’t manage the plan well or give enough investment choices. It gets complicated.

Here’s an interesting long definition on this topic you should read…


This risk of complication is inherent to anyone managing the retirement plan for another person.

This goes double for employers who have to provide lots of options to employees regarding the investment choices in which the employees’ plan(s) can participate.

Employers must offer reasonable plan options to employees… Click To Tweet
The law governing fiduciary responsibility states that employers must offer reasonable plan options to employees, but you rarely see real estate investing as an option. You don’t typically see gold or silver investing on the list of options either.

This means the employer is failing to provide ALL options, which then becomes a liability issue.

Take a look at this article. It should help you understand this caveat more fully…


Some of the people you are talking to are in the fiduciary seat. They are making decisions on behalf of other people’s retirement plans, which means you need to educate them as best you can.

They want more choices than they typically have within the plan. That’s why you are talking to them about participating in real estate investing.

But here’s the deal…

You have to become uber-responsible as a real estate investor who uses other people’s money in your deals by documenting everything.

You must be uber-responsible when using OPM!! Click To Tweet
You have to document, document, document when it comes to people you hire (property managers, maintenance people, construction teams, etc.), the people you partner with and work with, and the money you spend in your projects.

You are held responsible for all decisions you make regarding the use of that individual’s private capital… even if your decision is no decision at all. Your decisions to move forward with something or not will have an impact one way or another… and you are responsible.

So what are the options called that you give the plan holder?

These are called “in-service distributions” and you are going to explain how things will work, where the money will be used and what that looks like… documenting it!!

  • The P.A.Q. will help you document.
  • The Live Scribe pen will help you document.
  • Taking notes and converting those to contracts will help you document.
  • Keeping excellent financial records of how you use the investors’ money will help you document.

If, God forbid, you end up in court because you’re being sued or you are suing someone as a result of a deal gone wrong your documentation will go a really long way in helping you win your case.

Here’s another article I found that will help you understand this part.


I don’t mean to scare you, but if you are dealing with tenants you might eventually have to deal with an eviction or two. So keep good documentation at all times!!

But listen up… There is no reason to have fear – which is also code for “forget everything and run.”

FEAR is also code for “forget everything and run. Click To Tweet
I simply want you to go about raising private capital the right way and educate, educate, educate the people you’re talking to. Then run your real estate investing BUSINESS correctly, which means documenting the heck out of all you do, from start to finish.

When it comes to your conversations with fiduciaries of other people’s qualified plans, you need to go the extra mile. Explain that they have lots of options, and real estate investing is a good one. Then back your statement up with solid facts and numbers.

Again, learning how to use my Profit Analysis Quadrant™ (PAQ) will help you explain deals, explain returns and explain all the options in your deals. It is a form of documentation.

If you haven’t ever downloaded my P.A.Q. e-book, do it now. CLICK HERE.

Then become a Cashflow Core Member.

The first month costs a whopping buck… a single dollar bill… and you can take the P.A.Q. course. It’s good, it’s incredibly helpful and it will help you cover investors’ options!


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