Redefining the Financial Game ft. Manuel Soto | Coffeez for Closers with Joe Shalaby

0:00Before he was the CEO of TFA Insurance Advisors. Before he trained thousands of agents, before he was known as the financial architect, Manuel Soto was just a hungry kid with a mantra. Change what you're doing to change what you're getting. From top producing agent to multi-location franchise CEO, Manny's not just designing financial plans, he's building a movement. In this episode, we talk business structures, legacy, and why the financial world needs more builders and fewer salesmen. From blue-collar hustle to whiteboard strategy, from crisis to clarity, welcome to Coffees. You've got about 230 agents now?

0:45Last time I checked, we had 223. That was about close to a month ago, so we're probably at close to 250 at this point. So we're aggressively starting to scale. A couple different insurance carriers, VPs of insurance carriers have told me once you go over 200, it's a beast of its own. That's it. You're not going to recognize some of the people inside of your company. Yeah, we're at that level. We've got 870 loan officers. I've heard. Unfortunately, I don't know 750 of them. I've heard. But they know me. They better know you. Yeah, so that's good. And I try to be as relatable, but yeah, it does get confusing once you're over a few hundred.

1:27So what are some of your growth strategies right now? I just got done speaking a couple hours ago at a real estate group. You know, we don't do real estate. We don't do mortgages. We don't do taxes. So a lot of these mortgage and real estate companies and tax firms, they asked me to come speak to their agents and help them with sales and growth and scaling and sales skills, etc. So one of the big growth strategies that we have right now is multiplication, not addition. And multiplication, we all know, public speaking, social media, YouTube, I mean, everything that's geared towards IT or talking to crowds of people instead of one plus one, I want to multiply.

2:08So public speaking is a big deal. Yeah, that's one thing I've found. It's like what's allowing us to scale rapidly is just like I can echo my voice on social media. Any video I put out gets 50 ,000 views minimum. That's awesome. On one platform. Then I put them on 10 platforms. That's what I'm talking about. That's multiplication. So I can get any message out pretty quickly, which makes things a lot easier, especially when you're able to multiply that way. And then how about are you doing any seminars? Are you doing anything directly for financial strategists to come on board or just work in the relationships?

2:45Instagram right now is my best platform. When I teach these sales strategies, one sales strategy is three to ones. So I tell every salesperson they have to be on Instagram. They have to. And if they post three personal posts and one business every day on their story, they're bound to get something. It's jab, jab, hook. Gary Vaynerchuk said it the best. and then they post one on their feed. So if they're not on social media, they're closing the doors to that aspect of business. That's just not smart at all. So that's a no-brainer. Yeah. Yeah, it's imperative to be on social. I mean, that's your open sign.

3:24Yeah, well, it's free, free 99. I mean, whatever salesperson out there that says that social media just isn't me, I mean respectfully you're just not wanting to acclimate to the social media platform who does not like free marketing that just does not make any sense you'd rather pay for leads you'd rather go door knock you'd rather go beat the street come on let's let's acclimate to social media it's here to stay yeah so say I like to I like for my still strategy I like to tell everybody you have to have multiple strategies in place one of them social media the other one's lead buys The other one is voicemail blast.

4:05The other one is text message blast. The other one is buying Google ad space. I'm doing so much when it comes to marketing. I'm everywhere. I'm on every social platform. I'm on every audio, visual, written platform, blog platform, you name it. I'm on it. I believe the same. And you asked a good question. We do senior seminars too, and we pay for butts in seats. So normally when, I don't know, those of you that are seniors or you're north of 50, 55, and you get these coupons in the mail saying, hey, dinner on us at Fleming's or Ruth's Chris or Mastro's, we send out flyers like that. So it'll cost us anywhere between$7 ,000 to$10 ,000 per night to put butts in seats.

4:51But if you have 35 to 50 butts in seats, you're going to make 5 to 10x on that dinner seminar. Anytime, all day. Yeah. So, I mean, being a financial strategist, you know, and people, I got this question on my podcast yesterday because I don't have mortgages. You know, so it's like, how does a mortgage guy have no mortgages? Like, I just don't want any debt, you know, like cyclical of market been hit too many times. But like for you being a financial strategist, like what's one big financial mistake that you think taught you the most? Funny that you say that and you led into it with having no mortgage.

5:27I mean, I'm a big believer in not paying off your mortgage. And the reason why is because I have an acronym called LITR, L-I-T-R, that is really a full explanation. Well, you didn't go through the mortgage crash and lose everything. I did. Oh, I did. Oh, you did? Oh, I did. Yeah. So L stands for liquidity. I've been doing financial planning for 23 years, and I've made all the mistakes that every single household makes. So L stands for liquidity. Your mortgage, if you have equity inside of it, it's truly not liquid. It's only liquid if you have it in cash or if you have a sideline account. So liquidity is a major.

6:04Number two is I, interest rate. People that have a 3 % mortgage right now, they're never refinancing that bad boy. They would be dumb to do so, and they're holding on to sell their property even though they're broke. I is interest rate. That's a biggie. So if I'm borrowing money from a bank or a credit card at 20%, why would I do that and pay off my 3 % mortgage? You never want to send more money to principal. T is tax advantage. That's the biggest tax deduction that you have. Oprah Winfrey still has a damn mortgage, and she could pay it off any time she wants to. She thinks I'm broke. Tax advantage is a major.

6:40But the biggest one to me is R, risk. So we live in California. I know the big one's never going to happen here in California, but if and when it does and we have a paid off house or we have mad equity inside of our properties, there's a lot of risk there. So if I have 600 grand of equity inside of my house and an earthquake happens and my foundation is cracked, I'm thinking to myself, damn, the lender's not going to help me now because they're going to – they're like, hey, you got 600 of equity. I'd love to have your property and fix the foundation. We need earthquake insurance. And if you want to research it, all you have to do is go through the big old, what was it, hurricane in Florida, the other hurricane, Hurricane Katrina in Louisiana, and just ask some of the people that paid off their properties that saw their house float down into the ocean.

7:30It sucks. So one of the big financial mistakes is doing that. Another one is not saving money early. So many people say, you know what, once the Honda's paid off, then I'm going to start saving and investing. Once little Johnny goes to college, then I'm going to start saving and investing. People never plan to fail. They just fail to plan. So starting early is so, so important. And then lastly is, of course, the big no-no, which is not doing a due diligence when it comes to investing, period. There's a lot of investment advisors. I own a fiduciary firm, a registered investment advisory company.

8:05People pay us 1.6 % on fees, 1 % on fees. when I can get a better rate of return, historically speaking, from the S &P 500, which is you can go to Vanguard and get an S &P fund, SPX fund, for 25 basis points. So that's a nugget. I just saved lots of people here millions of dollars just on that one thing alone. So I'm a mouthful, bro. I love it, man. I mean, listen, you're like – I think your industry is probably more saturated than my industry. Everyone calls themselves a financial guru. How do you distinguish the financial guru between the financial architect's methodology? Actually, I don't know if this is current, but years ago when I did do the due diligence, I think the real estate industry and the mortgage industry was more saturated than the financial planning industry.

8:59It's just that you and I, we're from Orange County. So here in Orange County, there's a lot of fiduciaries. There's a lot of financial advisors. a lot of mortgage guys a lot of real estate guys yeah because this is i mean it's like the hub yeah i mean uh i have an office in chenille hills it's one of our 27 offices that we have and in chenille hills if you do research uh the average median household income is 111 000 here in corona del mar it's 200 000 corona del mar yeah i don't know that only makes 200 grand that's that's because they're business owners and they deduct it and their agi and how do they How do they afford a house that's$1 ,800 a square foot?

9:39Absolutely. Absolutely correct. So there's a lot of old money. There's a lot of old median household income. The wealth transfer is over$80 trillion. There's so many attractive things that are happening right now. We're knee deep in the thick of this, so it excites me. It gets me all pumped up. But what separates us from the competition is me personally is relationships. I mean, I don't know if you guys have seen or know or not. When I met Joe, it was like Man Crush Friday, man. The guy's a great speaker. He's very influential. He's got great energy. So I wanted to connect with him just as much as he wanted to connect with me because he's a high-identity guy.

10:22So for me, it's relationship building. People want to be friends with the people that they trust and respect with their money, obviously. That's number one. But number two is we're full service. So if they go to – I'm not going to say any names, but Primerica only has like one product or they got one investment, and they're overpriced. And they're – I might get in trouble for this. Their fees are super high. So if you get a term insurance policy with Primerica, they're 30 % more pricey than any product that I have. So we're the footlocker of financial services. We got a bunch of choices. I got AIG.

10:56I got Prudential. I got Pacific Life, Fidelity and Guarantee. where a Primerica has one company, one product, and that's your only choice. So that's a big difference. New York Life, I mean, all these direct lenders, you would call them in the mortgage field, we're the broker and the direct lender together. That's what makes us different. So, I mean, it's very similar models. And we actually call ourselves a hybrid broker-banker. We are a hybrid broker. All the big moneymakers are exactly what you just said. Have you guys offered the service directly under the financial architects that you guys have your own products?

11:33Even better. We don't have our standalone. This is the financial architect's insurance policy. But we have direct relationships with all these insurance carriers and investment firms. So if, let's say, I talk to you, and hypothetically, let's say you have diabetes type 2 and your A1C sugar levels are at 7.2. They're escalated. I'm not going to put you with LSW. I'm going to put you with AIG or Forrester's because they will underwrite your deal a lot better. Once I get a decline, I've now screwed you from getting life insurance for the next year at least. So it's little underwriting things like that that make a big difference that a lot of specialty guys just don't know about it.

12:19So it's things like that that are like these are all underhanded softball pitches, dude. So things like that that will make us different. Yeah. We actually do lend. That's why we lend our own. Through your own bank, right? Yeah. E-mortgage capital, we have our own warehouse lines. We write the notes. They pay it back. We sell it off. But what is the hybrid approach? Is it underwriting guidelines? Is it flexibility with underwriting? It's underwriting, number one. That's the biggest challenge normally because there's some insurance policies up to$3 million. It's simplified issue. So you don't have to take blood, urine, step on a scale, blood pressure, nothing.

13:06It's simplified issue. So if I'm outside looking in and I'm talking to the client, the client goes, hey, man, I haven't seen a doctor in seven years. I probably want to go simplified issue because I want to make sure that they get insurance when they check their MIB, Medical Information Bureau. So the underwriting is number one. Number two is product menu. Price matters to a lot of people. So if they get a term policy, for example, I'm shopping it with 80 different insurance carriers to get you the cheapest, most affordable rate based on your height and weight, etc. etc. Another one is cost, internal fees.

13:43So if you get a permanent policy like a whole life or index life or universal life, there's internal fees inside of the plan, very similar to mortgages. The difference is you show your fees. We don't. So you almost have to be a smart consumer and say, how much am I paying for fees? I know I'm giving you a thousand bucks a month for my whole life. how much of that is going towards fees and a sharp salesman or a little bit of a special salesman is not even disclosing that they're like a thousand bucks a month write the check okay awesome you know you're writing checks and you have no idea what the internal fees are as far as investment goes investments are easy way easier than insurance investments it's more like relationship built well i got a guy at morgan stanley i got a guy at Merrill.

14:31Okay, what are the costs? What's the cost that they're charging you based on your assets under management? They're charging me, I don't know. Okay, I'll beat your costs and I'll put you in the same asset allocation that they are. So that's what makes it a lot different. It's a mouthful, dude. I mean, it's so much. I've been doing this 23 years and I'm still learning. It's just like our space too. I'm always learning. I'm always like, something new is coming out, especially with AI. How are you guys using AI in your space right now? AI is here to stay. It's kind of like social media. If you don't acclimate to the new stuff, you're going to get eaten alive.

15:10I know some wholesale companies that we used to do business with, and they're like, we're old school. We're kind of family-based. And I'm like smiling at them and saying, man, I got to cut real quick because AI is going to take over this space sooner than later. AI can do due diligence on products. AI can literally manufacture plans. But what makes financial planning special, because I heard that tax advisors are in danger right now, because AI may be coming out with an app where I download my PDF and the computer, the AI specialist, does my taxes. So they have no room for error on the human side.

15:50Financial planning is different. We're a moving target. So let's say you tell me, I got$2 ,000 to invest. Where should I put it? I'm asking more questions like, well, what's important to you? Is little Johnny going to college? When are they going to college? And what's your height and weight? What's your health status? Are you worried about long-term care? Does mom and dad need an in-home nurse? I'm asking more questions that change over the length of time over 20 and 30 years. So AI in that strategy can only help with underwriting specifics, but they can also help with general questions of a new advisor as well.

16:30So we use that inside of our – well, the back end of our chassis. Now everybody talks about financial freedom. What's that word financial freedom mean to you? um because you'd like you're you you tabooed me with no i i thought financial freedom was being debt free so like man financial freedom means something different to you yeah i mean again dude whenever i'm sitting down with a client i'm more asking about them and what's in their world because you for example you may believe in i want to be debt free whereas other people they're like I want to use my credit or I want to use my company as a conduit to getting more ROI on some money, on debt.

17:19So if I could borrow money from a bank at 3 % and I could make 8 % on it, I'm making a 5 % arbitrage. It's different. So that's why my job is to really get into their world. I like not having debt, Manny. Now, based on that, what is financial independence to you? And then I would go through something called a FIN. A FIN is an acronym that stands for Financial Independence Number. So the way that you figure out a FIN is you ask the potential client, what is your monthly desired goal? And they go, what do you mean? Well, to live on. Let's say you retire tomorrow. What's your monthly goal? Well, that's a moving target with inflation.

17:59How are you going to factor in a 23 % inflation rate? So there's an old formula that accounts for inflation, whether it goes to 8 or whether it goes to 3. Yeah, but it never counted for 20. I completely agree, and it's something that, again, is going to be a moving target, and I'm interested to see what goes down. Whether the Fed raises or lowers interest rates or whether unemployment goes up or down, it's going to be interesting. We may even go through stagflation, which is a big danger right now. Yeah, I've mentioned stagflation on some of my videos. stagflation is the worst possible possible thing you can go through they talk about deflation being danger nah man it's stagflation that's going to be super dangerous so let's say in that the fin you asked me that question let's say the client goes i can live on 20 grand a month to pay all my bills and i want you to take into account inflation there's a formula called the rule of 200 so you take the$20 ,000 monthly, you multiply it by 200, which is$4 million.

19:01That's going to be their FIN, their financial independence number. That means that by definition, whether they're 56, 66, or 71, once they hit$4 million through an annuity, you can pay and get paid through principal and regular payments. You can get paid the$20 ,000 a month like clockwork. So it's an old formula. Sounds like alimony. Yeah, that'll be another conversation big time. Alimony. It sounds like child support alimony. Damn, that's heavy. That's funny. No, but I like that financial independence number because that's kind of like how a lot of us kind of create our retirement models. What do you think the average fin is for someone right now?

19:50If the average husband and wife make$80 ,000 a year, which is a mind blower to you because you're in a top-notch area here, but the average husband and wife in L.A. County make, I think,$87 ,000 a year. So you would just factor in$87 ,000 a year, take the monthly, which let's say is about$7 ,000 a month, multiplied by$200 ,000. It's$1.4 million. That's crazy. It's$87 ,000 when the average home to buy in L.A. is like$2.5 million, which puts the average mortgage payment around like$18 ,000. Don't get me started on that. There's literally, I think, 13%, 12 % of Californians that can buy right now.

20:33And if you're sitting in that 12%, half of them don't believe they should buy. They think it's a dumb decision right now, currently. Yeah. Now, I don't want to go and be controversial. Yeah, I do. So if 6 % are looking to buy and they can qualify, that's the reason why the mortgage industry is down right now. I mean, it's like, what, 70%, 75 % down, the real estate industry as a whole. And unfortunately, you can't pay the bills like that. California has runaway inflation, in my opinion. I think California has just run wrong. Obviously, it's a liberal state. I won't get political too much, but there needs to be something to save more business owners because business owners create jobs.

21:17They create more paying jobs if the economy is doing well. But unfortunately, economically, we're at a standstill right now because of that. Affordability is wild. And I normally ask people that tell me that real estate is going to double in the next seven years or five years, my dad. and I said, Dad, please explain how does that make sense when husband and wife still at L.A. County make$87 ,000 a year? Oh, man, it's just going to. Okay, explain to me mathematically how that even makes sense. It can't. So either all the rich guys move to California or we have some type of economic shakeup that's going to be forcing us to be more affordable.

22:00Well, we're seeing all the rich people from L.A. move to Newport Beach and that's because of the fires. The fires. I was about to say that. And what's happened as a result of that is Newport Beach has gone up like 50%. And Newport Beach, Orange County in general, they're a red city, a red county. They're conservative. The vast majority are conservative and they're mostly business owners. I can see why. I get it, but I won't get that political. um now you you've emphasized like always creating additional income streams what's an unconventional strategy you you recommend that has yielded you and others you know surprising results i mean as a business owner you know this joe is leverage um i can take 100 % of my own efforts and go to work and kill it, or I can take 1 % of 100 people's efforts and get the same type of outcome.

23:03So I think leverage, leveraging businesses, leveraging ownership. For me, I own a franchise. So it's a Kindle, like a McDonald's, like a Jack in the Box, like a Subway. So TFA is a franchise. I sell the franchise model. So if there's a real estate group and they're down 70 % and I own a financial planning firm, I put TFA inside of their already successful business model. It's like having an extra, like an escrow company within their company already and, uh, offering mortgage protection, offering living trusts. There's only two things that get you out of being broke. It's making more money or saving more money only two.

23:47So if I work a job and I'm making$62 ,000 a year, I literally have no opportunity to make more money. So the real opportunity is having the opportunity. So if let's say they pick up a side hustle, they do Uber Eats, they Uber, they go work for the financial architects and sell one living trust and make an extra$400,$500 within that model. That's a great side hustle. Again, you can only get out of trouble when you make more or you save more money. Another thing is re-budgeting. People never look at their apps. I'm even guilty of this, bro. I got apps on my phone that I didn't even know I downloaded.

24:28And it's costing me money every single month. And I don't pay attention to that. Again, people never plan to fail. They just fail to plan. And they're just not paying attention. Edison bills, again, re-budgeting, looking at their cars, looking at their taxes. Some people go to their tax advisor for 18 years and they never check their tax advisor. This guy or gal is a human just like you are. And if they're making mistakes or they're being lazy with your taxes, it's time to replace them. So these are just some small things, making more or saving more money that can help a regular consumer. I love that.

25:03And I mean, it's just the obvious that helps the regular consumers. But it takes To your Fanning your fire bro It takes a podcaster It takes someone in public Publication Sharing these types of things So that the listeners go Damn man he's right I gotta take some action And that's the thing Normally to make a sale You've done sales for years dude Normally you gotta touch that person Five to eight times It's more now. Is it really? Yeah. That blows my mind. It's more around 30 touch points. Oh, my gosh. Yeah, we got 30 touch points before we get a conversion. Man, get it going. And it's going to get worse because society is more ADD.

25:49They're busier than ever. Yeah. They don't answer phones. They stopped answering phone calls. Now they don't answer text messages. Yeah. Now they don't answer voicemails. So it's like how many times can one be reminded before they actually make a response? Right. wild wild 30 that blows my mind dude like for me i'm all action like even even uh again i did a i did a sales presentation a couple hours ago and i'm like hey when you guys get out of bed the alarm goes off you got to tell your mind immediately time to go man no snooze button you're wasting an hour just by pressing snooze it's time to get up go take a walk for 15 minutes do something to shake yourself up and what i find is that people are just so fixated on these habits um one of my best sayings is the chains of habit are too light to be felt until they're too heavy to be broken we all just have bad habits man and shaking out of those habits are so important to regular people that you know influencers like you need to go hey man this is this is the direction that we're going let's go and they get motivated by your action your energy your enthusiasm and your excitement to go and and push towards that direction so it's awesome yeah it just takes you know a few more million of me and we'll have a great society there we go shit i'm on board um how do you address people who are skeptic you know you're you're the skeptics from your clients who are weary of financial planning due to all the misinformation, their past experiences, all the sales mumbo-jumbo, all the BS that they're fed all the time.

27:30Those are like financial planners are almost borderline taboo. Again, like that mortgage broker taboo that we had in 08. Yeah. Financial planning. Yeah. I have to get behind it, actually. I think... You're like, yeah, you're right. You're right. I hate to say it this way, but rookie advisors are going to get you in more trouble than anything else. Because think about it for a second. Let's say I'm a rookie, and this was me 23 years ago. You're like, hey, just do a whole life. Exactly. No, I was telling them to do a VUL, and that VUL was really expensive at that time. When I first got in the industry in 2003, that was a pricey vehicle to get involved into.

28:07I should have just bought a cheap term policy and invest the difference in a Roth IRA. Seven, eight out of ten people in the United States should get a term policy and invest the difference in a mutual fund or stock portfolio. The rest should be looking at more of a permanent chassis. Or if you're worried about long-term care, let's say you're 80, 82 years old, and you're like, man, I don't want to bug my friends or my family to come take care of me when I just had a stroke. That's more of a permanent chassis inside of that plan. So financial planning, again, is a moving target. But advisors, I mean, if I had to put a fraction on it, bro, God, I feel bad if you're even saying this.

28:48Nine out of ten of us just suck. They don't do their due diligence. They take their broker's word for it, and the broker's there trying to make as much money as he or she can. And they need to go do more due diligence and homework. And I mean, I didn't go to college for a year and go, man, I'm just going to act like I got a degree after four years. That's what I find financial planners doing is they're not well read. They don't know economics. They don't. I mean, I look at the S &P 500 every single day. Like I'm on it. I have my ear to the ground. And I'm not even servicing clients anymore unless their net worth is over three, four million dollars.