Let’s Retire Retirement and Build a Life You Don’t Want to Escape with Derek Coburn – EP 242

Justin Donald: What's up, Derek? Good to have you on the show.

Derek Coburn: Justin, good to be here, man. Nice to see you.

Justin Donald: Yeah, I'm glad that we were able to get this worked out. We've talked for a little while about having you on the show and we've crossed paths, I feel like, a ton in the last year or so. You are a good friend of John Ruhlin, as was I, and we got a chance to hang at the Celebration of Life. And we're part of MMT, MastermindTalks, so we got a chance to hang in San Diego together and get some good time. I feel like there's one other place that we cross paths.

Derek Coburn: Maybe Garrett Gunderson was trying to connect us. Yeah.

Justin Donald: Yeah, that could have been it too. I just had him on the show again for, I don't know, the third or the fourth time. He's the winner. I've had him on more than anyone else. Most people I've only had on one time. But the stuff that we unlock is just so much fun.

Derek Coburn: Yes. It sounds like your listeners are probably the winners if you have him on as often as you do because that guy is amazing and a wealth of knowledge.

Justin Donald: No kidding. Well, I'm excited for this new chapter that you're in. I mean, we get a chance to talk now as a post-exit founder here. But I kind of want to paint the backstory for people because you have been a financial advisor since 1998, so 20-plus years, almost 30 years as a financial advisor, or 25, whatever it was. And then you sold your practice in 2019. And so, I'd love to talk a little bit around what that was like emotionally, any of the numbers you care to share. I just think it's always fascinating when people have a total interrupt in what they were doing.

Derek Coburn: Yeah. So, started in 1998 and actually I started writing this book that's coming up, Let's Retire Retirement, in 2017 and my motivation for doing it was I wanted to use it as a way to meet more clients. So, my typical client had about a minimum of $5 million investible assets under management with me. And I wanted to write a book and appeal to a group of people out there that I feel like were going underserved. And that was the group of people who are not planning to retire or who are going to work longer than what society is telling them that they thought they were going, like past the age of 65, if you will.

So, I started writing this book thinking it was going to be a great way to attract more clients. And then sort of out of nowhere, my partners and I got approached by a private equity company to buy our practice. And we sold our practice, got a nice earnout, which lasted from the end of 2019 until the end of 2022. And I stopped thinking about the book. COVID happened. My father passed away. A lot of these things happened to where I got to a place where I now have about 40 or 50 clients left, people that I've been working with for a really long time. I'm excited to continue to be in the role to support them since we've been working together for a while, but I'm not really interested in growing anymore beyond that.

And so, what it allowed me to do is sort of return to the book to say, "Okay. I think I can write a book now where I'm not trying to get anything out of it. I can really help a lot of people.” And the result, the way that came to be, I think was in part due to the fact that I had some money in the bank. I got to process a lot of my trauma, my tendencies, a lot of the things that I was subconsciously doing for 25 years as I was building my business and building my life. And I think I kind of won the game that most people are playing. I might not have won it the way other people have won it, but I won it to the extent that I got enough money in the bank to be able to step back to, say, do I even want to play this game anymore? And the answer was no. And so, then I got to play the game of what do I want to play instead?

Justin Donald: Well, that is definitely winning and it's winning at a high level. Anytime that you win the numbers game, the financial game, where you don't have to work, you get to work. I love that. I talk about that transition all the time. I love that you're writing another book and I think it's important for people to know you are already a number one bestselling author because you wrote a book called Networking is Not Working. And so, now we're getting into maybe even something that's more of a passion project for you today beyond maybe or maybe it's equal to Cadre, which we'll get into, which is your mastermind community.

But something that we are talking about off air that I think would be fun to bring up is just this whole idea that 401(k)s may not be working the way that we think that they're working. And I'd love for you to riff on that a little bit because most of the people that I know who are in corporate America or work for someone really max out their 401(k) and that really is their primary investment vehicle and maybe it's their only investment vehicle. And so, I thought you had some wise words around kind of beware because it doesn't always work the way you think it works. It depends on your situation.

Derek Coburn: Yeah, for sure. And even at a high level, the Father of the 401(k) plan, this guy named Ted Benna, he feels like it's gotten wildly out of control. He never wanted it to be the primary investment vehicle that people were using to fund 30 years of their life. But if you think about the main selling point with 401(k)s, the reason why everyone gets excited about them, it's this idea that I get to defer the tax now. While I'm working, I'm earning an income, I'm in a certain tax bracket. I get to put the money away and get a tax deduction. And then when I go to take it out, I'm not going to be working. So, I'm clearly going to be in a lower tax bracket when I take it out. So, this is a very good deal for me to avoid paying the tax now and pay it later.

Well, once you get to a point where you feel like it's possible, you're going to work longer, you're going to work into your seventies in some capacity, notwithstanding the fact that tax rates right now are close to historical lows, like I think even if you remain in the same bracket, it's likely the percentage you're paying is going to be higher in the future.

Justin Donald: Totally.

Derek Coburn: But let's say you're working at 75 and now you've got RMDs on top of that. Not only are you not in a lower tax bracket, but you might even be in a higher tax bracket. And I think that's the main reason why so many people put money into these pre-tax 401(k)s and IRAs in the first place. And I just want to bring to everyone's attention that I don't think retirement's going to be this thing that's going to suit a lot of people. We're already seeing upwards of 30% of people who have “retired” that are coming out of retirement, this un-retirement movement. And so, I'm not saying that it's bad, but to your point, the majority of people, like most people have the majority of their retirement savings in these pre-tax vehicles.

And I think now up to 90% of 401(k) plans in the United States have the option to make Roth contributions, which could be as simple as just checking a box on a website. And I think it's important for people to diversify how their money is ultimately going to be taxed just as much as it's important to diversify how your money is divided up between asset classes.

Justin Donald: Yeah, I think that's super wise. And it does make sense. If we are uncertain about what tax rates are going to be like in the future and we're at historic lows now, it begs the question: should you pay the tax now, roll it into a Roth, and diversify that holding? So, I like that thought. And generally, anytime the government limits the amount you can put into something, it's because it's probably a good thing. So, max it out as best you can and probably max it out before any of the other vehicles.

Derek Coburn: Yeah. I think it's a good idea though for people to kind of take a look at what assets they have now, project out into the future what they're going to be worth, and say, "Okay. I have 80% of my money in accounts that are subject to income tax on the way out.” Like, you're making a bet whether you realize it or not. You're making a bet that there's not going to be a super progressive president or Congress or Senate in place that's going to pass laws to say that the highest marginal tax rate's going to go up to 60% at that point. Because if it does, throw in RMDs, you're now forced to take the money out of these pre-tax vehicles and pay whatever tax they tell you to pay versus you being more mindful about diversifying this over time.

So, start aiming to have some of your money in these, get the tax deduction now, have it be subject to income tax on the way out, but then also have money in the tax-free buckets, have money in the brokerage accounts where you're paying capital gains just so that you're a little bit more balanced and can be flexible based on whatever the government's doing with tax rates at any given time.

Justin Donald: Yeah, that's good. Super wise. Good sage wisdom there. Before we dive into your book, I'd love to talk about it because your book is about retirement and that retirement may not be the thing. Like, let's get rid of retirement. And so, you're in a place where you “retired.” Now, you and I both know you found some great things to do and it's hard for us young guys to retire, right? I had a season where I “retired” and I didn't work for a year back in, what, 2017, part of 2018 even. And it was great having a season of travel and doing some cool stuff, but there's no way I could do that the rest of my life.

So, you're in a situation like me where you could really retire. You have enough money and you actually know how to grow your money, right? I mean, you are skilled in this practice. You're very smart from a financial standpoint, and so you're set, but you're not going to retire. You're finding other things to do. You're still pouring into some of these clients even though you're not looking to grow your book. You're looking to kind of add value. But I'd love to know just some of the thoughts around for you is, for you, like when you think about you sold in 2019, you had a three-year earnout, you were done in 22. So, now it's been around three years, maybe not quite three years, depending on when you actually finished that earnout, but close to three years that you haven't had a formal job or business.

In the beginning, was there an ego component that hurt or felt strained? Or was there a financial time where it was like, “Ooh, I don't have the cash flow rolling in like I did when I had the business and it makes me want to be a little bit more scarce with how I spend”? What are some of the emotions and practical things that you went through?

Derek Coburn: Yeah, for sure. So, I will say, look, I've had Cadre this entire time, which you mentioned before, and we can get into that if you want to in a bit. But to your point, I was in a position where I didn't have to work really hard or at all. And my priority right now and for the past couple of years has just been to really max out the time that I'm spending with my kids. I have two boys, 15 and 12, and I had this period of time when they were ten and seven where my wife and I would alternate tucking them into bed. We would each take turns, lay in bed with them, reading them a story, getting that nighttime snuggle in.

And I found myself as my oldest was getting older wishing it would hurry up like, "Come on dude, like fall asleep so I can go watch this show with your mom and respond to this email.” And I'm like, "Wait a minute, any day now he's going to say he doesn't want to do this anymore.” And I'm wishing it's going to go away and I know I want to be present. I know I'm going to miss it when it's gone. So, I tried to force myself to be more present. And that worked a little bit but not really. So, one day I had this thought and it was I'm in the future 30 years from now and a company's invented a time machine, and they're telling me that they can send me back in time to have one night with my kid where we get to go through this routine again.

I get the night with my 10-year-old where we do the bedtime story. We get to snuggle. I get to like watch him fall asleep. How much money would I pay for that? And for me, I said it's $50,000. It would be more than that I think, but like $50,000, no problem. I would write that check in a heartbeat to go back in time for one of these experiences for one night. So, I started treating it like the $50,000 experience that it was. And even though I'm not having these moments, these bedtime moments with my kids anymore, I have lots of other moments. Like, my oldest and I, we work out together three days a week. We have a gym here in the house.

Justin Donald: That's cool.

Derek Coburn: We're spending an hour together at a time when most 15-year-olds don't want to hang out with their dads all that much. And my youngest is playing travel soccer. We're in the car a whole lot. So, for me, I’m just leaning into this extra hard because I know, and this will represent my thoughts on retirement but in a more condensed window, I know that when my youngest leaves the house in five and a half years, I'm going to be ready to work even more. Like, I'm going to be ready to speak in more stages. I'm going to be ready to ramp up whatever it is that I'm doing. But for now, it feels really good to have it on cruise control, and all of it is sponsored by. It's almost like someone wrote me a check. It's sponsored by this money in the bank, and it's sponsored by me knowing that I'm going to be ready to show up and earn more money once they're gone.

Justin Donald: I love that and I love how family-oriented you are. I had the pleasure of meeting your wife and she's an absolute sweetheart when we were in San Diego. So, it's just so cool seeing you be family first and say, “Hey, I could be making more money, but I'm good. I don't need to maximize it. I've got enough. Let me spend time. Let me spend the quality hours.” And you bring up a great point of these seasons. They go by. And sometimes we don't respect how amazing they are inside the season and then when we look back upon it, it's like, "Oh, I miss that.” And so, I love your presence there. And I think what you're saying is you're finding value in other things that you deem more important than work or more important than retirement.

And so, when we talk about retirement, it's kind of an outdated term. It's kind of like an experiment, right? This is not something that's been around for a century, right? This was kind of invented as like a trial to see if it worked. And quite frankly the financials around it don't work because the Social Security and disability and all these things are going to run out, Medicare, Medicaid. But what inspired you, I guess, originally to challenge the traditional idea of retirement?

Derek Coburn: Yeah. Look, I just knew that I was never going to be happy fully wanting to retire. I worked initially at a life insurance agency associated with MassMutual when I came out of college and the guy running our agency, the general agent, he kept saying, he kept counting down by the days when he was going to retire. And I just felt that was so strange and such a selfish way to go about living. And I started having conversations with my clients and I started asking them a question that really no other financial advisor that I know of, or at least not very many others, are asking, and that is, do you even want to retire?

Whereas, pretty much anyone else that goes into a conversation with a financial planner or with a calculator online, they just say, "What age do you want to retire? You have to pick one. You have to go along with this idea whether you want to or not.” And so, I found that with a lot of my clients, they probably didn't want to ever fully stop working. A lot of them didn't want to continue working at a big law firm and billing 2,500 hours per month, but they for sure didn't think they would be happy just sitting on their front porch sipping lemonade for 30-plus years. And so, by adding these numbers into their financial plan and showing income coming in longer than what they were previously planning for, it opens up an incredible amount of flexibility in the short term.

So, I give an example in my book about a guy named Tony. We can change the numbers if you want, but the example I gave in the book is Tony is 45. He makes $150,000 a year and he’s got $150,000 saved up for retirement. So, you can add a zero to each one. You could make it 500,000. The math is going to be about the same. If Tony wants to retire at 65, he's going to have to save about $2,400 per month every single month between the age of 45 and 65, which is about 20% of what he's making, which is a non-starter for most people. Regardless of what you're making, if you're investing and saving 20% for retirement, that means you're saving about what you're spending, right?

And so, Tony's like, “I don't know what I'm going to do.” Tony then says, "You know what? I like my job or I think I'll always want to contribute and do something. So, what if we make it 75 instead of 65?” And the amount of money that Tony has to save by extending his working years by 10 goes from $2,400 a month down to $110.

Justin Donald: Wow.

Derek Coburn: So, go down by 96%. And the reason for this is we get 10 extra years of working, 10 extra years of letting that money compound, and then you only need the money to last for 20 years instead of 30 because, in both examples, I have him kicking the bucket at 95. And we've seen these articles that say when you were 22 years old, you should have been putting aside more money to take advantage of compounding interest. And none of us really did that. And if we had, it wouldn't have mattered that much because we're earning a lot less than we are now. But no one's really talking about how you get the same benefit but a much greater benefit by just letting it play out on the backend as well, letting that money sit in a much larger amount of money, stay invested for an extra 5 to 10 years on the backend.

So, I just want people to know that the dramatic difference and the amount of time and money that it frees up for them right now by just recognizing and realizing they'll probably work longer than what they previously thought they were going to.

Justin Donald: Yeah, that's great. And here's the other thing. We've talked about this ad nauseum here the last few times we've gotten together but there are a lot of mistakes people make in retirement. And I'd love for you to share some of the traps or missteps that you commonly see people making so that our audience can avoid it.

Derek Coburn: Yeah. So, look, we talked about the 401(k) and the idea that saving pre-tax money is a good idea once you're going to be working. I think another one is mortgages, right? I'm sitting here right now with a 3% 30-year fixed mortgage and we're getting 4% to 4.5% in money market accounts, right? People I think just have the generational trauma of the great depression when mortgages were callable loans and a bank could say, "Write me a check for $15,000 right now or I'm going to take your house away,” which they can't do anymore.

People want to pay down their house and they think it's the safe thing to do, when in reality, especially if you think you're going to be earning an income into your seventies or beyond, if you can get a mortgage, if you can refinance and get a low mortgage rate, I would be doing that all day long because why give up probably the best tax break that you have access to, just to be able to say that you have your house paid off, right? So I think that's one mistake that I see a lot of people making and I can maybe go on and elaborate,

Justin Donald: Yeah, let's do a few more. And I love that one. I always tell people it's free money. I mean, those of us that locked in at 2% to 3%, it is free money. I am in no rush to spend any of that down. And, for me, I even go the extra mile on it where I want my money working as much as possible. So, I actually do an interest-only loan. So, when I do a mortgage, I'll lock it at either 30 or 40 years but I'll do interest only for 10 years. And that way I can take the rest of that payment and invest it and get that same return that you were talking about, or maybe even a bigger return if I decide to allocate it outside of just treasuries.

Derek Coburn: For sure. I think a lot of people think that when they put more towards the principal of the house that they're investing in their home when it's actually the equivalent of just putting cash under your mattress. Because if we buy a $2 million house and I put down $200,000 in one scenario, in another scenario put down $400,000 and the home appreciates by 10% is now worth $2.2 million. My rate of return was actually much better by putting less down than if I would’ve put, because you get to participate in the full appreciation of the home regardless of how much you've actually put down.

Justin Donald: Cash on cash return, one of my favorite measuring tools, right? How much did you make and the cash you actually put to play and what's the least amount you could put to play to own the asset?

Derek Coburn: A hundred percent all day long, man.

Justin Donald: Yeah.

Derek Coburn: Look, I would say another thing that I’ll bring up here that I think a lot of people are missing is long-term care insurance. And I will say that I have a slight bias because my father was diagnosed with dementia at 63 and he lived with it for 10 years. But I will say, I’ve been talking about this with my clients well before my father was diagnosed with dementia. And in fact, I helped my parents set up a long-term care policy that ended up saving my mom a couple million dollars. So, I’ve always referred to Alzheimer’s and dementia as the iceberg to your financial plans Titanic, that, great, you have a wonderful portfolio that’s been outperforming the stock market by 1.2% every year for the past 20 years, but your advisor never brought up this potential, this idea that what happens if something happens to your health or what happens if something happens to one of your parents. Assuming that you’re not going to let your parents just spend on all their assets and live on the street, you’ll step in to do something. Well, you should also then involve yourself in a conversation ahead of time to make sure they have something like this put into place.

So, I think that one of the best things that I did for the majority of my clients, I worked with a lot of wealthy attorneys and a lot of wealthy business owners. They were set, they were in their 40s and early 50s. The long-term care conversation wasn’t necessarily relevant for them yet, but almost all of them had parents in the 50s, 60s, and 70s that they wanted to provide for in case something happened. And so, I helped them get long-term care in place for their parents, which has ended up saving so many of them, so much time and money. And I just think it’s an overlooked conversation that a lot of advisors are not having with their clients.

Justin Donald: Yeah. And if you do it early enough, it’s not that expensive, right? I mean, yeah, it’s definitely worth considering because at some point, most of our parents are going to need long-term care. Now, tell me this, with people that have financial success, in your case, you had an exit. I’ve created a lot of passive income over the years. I’ve had some smaller exits. I’ve never had a home run exit like you’ve had, but probably, in a matter of time, there are a few kind of dangling out there for me. We’ll see if they come into fruition, maybe they don’t, and that’s why I did cashflow in my favor, so that way, whether I have a big exit or not, I’m fine.

But I’m curious, once money’s there, I know a lot of people are trying to solve for money and they actually think that happiness and fulfillment is going to come when they earn a certain amount or they have a certain net worth, or they have this size of an exit. And I think people will be disappointed to find out that’s not the case. It actually isn’t as satisfying or gratifying as you think. And even for what it is, it really only lasts for a little period of time, and then you’re like, “Okay, what’s next? This is boring. Let’s move on.” So, my question to you is, once money’s there, what do people truly crave in the next season of life? Like, how do people find fulfillment?

Derek Coburn: Yeah, great question. And I will say, look, my exit was probably more in the double/triple range than a home run range. So, I’m comfortable. I’m really good. I won’t be able to coast the rest of my life and never earn a penny again. And so, I want to point this out because I think a lot of what we’re talking about today, like when I was sharing with my kid about how I spend time with my kids, I could do it if I had less money. I could make the conscious decision to do that, knowing that I’m going to be earning more coming up in the near future than what I’m earning right now.

In terms of the happiness, I have a chapter in my book called Happiness Versus Meaning, and there was a study done out of– it was either Stanford or North Carolina. Barbara Fredrickson was the researcher’s name, and she divided up a group of people into two groups. Those who prioritized happiness, personal happiness, they wanted themselves to be happy. And the second group were people who prioritized purpose or meaning, and they hooked them up to brain monitors, heart monitors. And people that prioritized personal happiness had their bodies respond the same way that a body responds when it’s dealing with chronic adversity, the loss of a loved one, the loss of a job, going through some real trauma, their inflammation went up very high, their immunity was down. They were more likely to get sick and die. Conversely, the group that prioritized purpose, like they were here, they had a bigger reason for living beyond themselves, had just the opposite happened in their body. Their inflammation was incredibly low. Their immune systems were working great. They were much less likely to get sick. They were much less likely to get a disease.

And the moral of the story is that if you want to be happy, the best way to become happy is to not directly pursue happiness. It’s to really be thinking about the bigger picture. How can I contribute? How can I lend my gifts, my talents, my wisdoms to the greater cause? And I think that’s why we hear so many stories about people who, a few years after they retire, they drop dead. Something happens. They lose some significance. They lose some meaning. And I think it’s also the reason why this unretirement movement, which we hinted at earlier, about 30% of people who have already retired are going back to work. And it’s not because they need the money, it’s because they missed the connection. They missed the contribution. And our bodies, I think, just have decided like if you’re showing up every day, still looking to make a difference here, we’re going to do what we can to make sure you stick around as long as possible. And if you, all of a sudden, only want to be here to sip fruity drinks on a beach somewhere, then we’re not going to respond in a way to keep you here as long as maybe we would otherwise.

Justin Donald: Yeah. And I think it’s important that we keep our minds and bodies sharp. And we do that by doing meaningful work, by learning and being curious and being a student. And I mean, the actuarial tables will show you that when people retire, if they don’t get involved in something, I mean, the percentage that die within four years of retirement is incredibly high. I can’t even remember the stats, but I just remember being blown away by it and it’s just reinforcing the fact that I don’t ever want to retire. Now, I love what I do and I plan to do this for a long, long time. And if it’s not this, it’s something else, because I really do enjoy teaching and sharing and relationships and bringing communities together like that is really fun for me. So, I feel like I can do this for the rest of my life. But if this ever got old, I would find something that felt new and fresh and exciting that I would want to pour into. And I think that’s important.

Now, for you, we’ve talked about this before, but your faith is really important to you as it is with me. You live in Washington, DC, which, that is a melting pot of different people and religions. I think you go to Mark Batterson’s Church out there, right?

Derek Coburn: Oh, yeah. Yep. National Community Church.

Justin Donald: Yeah. So, how has your faith kind of helped you in this transition and some of the moves that you’ve made and the relationships that you’ve had? Because I find it to be quite a guiding north star for me in the way I want to show up, in the way I want to interact and treat people. But I’m curious how you’ve seen it show up.

Derek Coburn: I’m so glad you ask this question because I haven’t talked about it enough and I want to talk about it more. So, I would say that one of the things that the sale did for me, it allowed me to sort of take a step back. It allowed me to really think about what I wanted to do next, and part of that process for me was being more intentional about prayer, being more intentional about having a meditation practice and really slowing down, recognizing that I could benefit from having a stronger connection with God, a stronger connection with the Holy Spirit. And the verse that’s been on my mind the most and what I really tried to embody for the past year, year and a half, is the Parable of the Sower. So, quick reminder, can I share this real quick?

Justin Donald: Yes, please do.

Derek Coburn: All right. So, Parable of the Sower is the seed is synonymous with connection to God or connection with God’s word. So, in the first example, a seed falls down from heaven, lands on pavement. A bird comes by, eats it, flies away, does nothing. Second example, a seed falls down, lands in a crack. So, it starts to sprout but has nothing where it can take root. It dies very quickly, nothing happens. Third example, seed falls down, lands in a thornbush, starts to grow, takes root but gets choked out by the weeds. Fourth and final time, the seed falls down from the skies, lands in fertile soil. And it produces 100-fold what was intended.

So, one of the reasons why I love, love this story that Jesus shares is that it doesn’t work the majority of the time. Being able to connect in a deep and meaningful way with God does not work 75% of the time. And it never works in a way where it does what it’s supposed to do. The one time that it does work, it produces like literally what it says in the text, 100-fold what was intended. So, I feel like I have a certain responsibility and a certain obligation that if I’m going to allow God to work through me, if I’m going to be led by the spirit, then I need to take really good care of this. So, I’ve gotten really good at prioritizing things like sleep and diet and working out and really taking great care of this. I’m not interested in setting long-term goals anymore. I’m interested in having the right habits so that I show up every day with the most fertile soil possible so that I can really feel into where God’s trying to take me and where he is trying to lead me.

Justin Donald: Oh, I love that. That’s powerful. And I love that, even just saying, hey, why do I need a long-term goal if I’m establishing the habits and the rituals and routines of just how I want to live every day, right? And where that’s going to take me? If the compass is pointing in the right direction, if I’m moving the right direction, then I’m going to get to where I need to go. So, I love that.

Derek Coburn: And this book was born out of that. And it just feels really good. Like, I mean, I’ve been a Christian my entire life and I feel like I’ve always believed, I’ve always had a connection there, but when this book was birthed and the way that I was channeling the words and how it wasn’t hard, it wasn’t a grind, it just has felt the entire time like it’s come from God and that I’ve been chosen as somebody to share this with the world and to sort of lead this conversation, it’s just an incredible feeling and it’s a result of me doing a lot of that work to make sure that I was in a better position to receive that connection. Because look, as much as we might want to think so, this is my belief and maybe somebody believes differently, but if we’re tired, if we’re exhausted, if we’re stressed out, if we’re unhealthy, if we’ve got all of these things that are bogging us down, I found that it’s been a lot harder for me to connect with God than when I’m feeling better, when I have a clear mind, when I have more energy, and that’s been something that’s worked really well for me.

Justin Donald: That’s so true. I love that. And yeah, we not only need to make time, but we got to be great listeners. And this year, I’ve just been working hard. Like, one of my goals is just to be more bold with my faith, just to talk about it more, talk about it from stage more, talk about it in podcast more, just to bring it up, because I think there are a lot of people out there looking and trying to fill a void with things that can never fill the void, like money or fame or success or whatever it might be.

Derek Coburn: I agree, I agree. Well, thanks for doing that and hopefully, I’ll have an opportunity to do the same.

Justin Donald: Love it. So, I really, before we wrap up, want to dig into Cadre. This is a mastermind that you’ve built and it’s primarily for people local there in Washington, DC, because you do a lot of stuff in person. But I’d love for you to get a chance to speak about it because I think masterminds are the greatest way to level up in your life, to connect with like-minded people, to find people that can help you play the game of life and business and wealth creation at a higher level, and to have fun doing it, building relationships and having accountability, being challenged, bringing other people up as you experience success and sharing your lessons. And so, I’d love for you to take a moment and just talk about what Cadre is.

Derek Coburn: Yeah, so I started Cadre with my wife in 2011. I think that’s right, 2011. And it was really born, I had grown my wealth management practice up until then, primarily by hosting smaller events where I brought my clients together to do something that they would enjoy and had them invite their friends and their colleagues. And the book that I wrote, Networking is Not Working, in 2014, sort of, it’s a networking book, but it’s me saying, I don’t think you should go to big networking events. I think they’re a waste of time. Instead, I think that you should host smaller events that are centered around client appreciation and using them as a way to acquire more clients.

So, I got really good at figuring out how to host these smaller events, how to bring people together. And it was at a time where I was traveling, I was qualifying for all the big trips within my broker/dealer. I was the youngest person by like 5 or 10 years, and in some cases, a lot younger, but all the advisors that I was hanging out with on these fancy trips, they all had 1,500 clients and they all only liked working with about 20% of them, the good old 80/20 rule. And I said, I just didn’t want to go down that path. And so, I ended up, I had about 350 clients at the time. I got rid of about 275 of them to lead me with about 75. And I used this extra time that I had to sort of create this new community with my wife, and we just brought together CEOs, entrepreneurs, and trusted advisors. And trusted advisors, I include financial advisors, real estate agents, accountants, attorneys, like the professionals that sort of get left out of some of the other groups because they’re not an entrepreneur or a business owner.

But as you and I both know, some of the more connected professionals and some of the best types of people to have in a community where it’s centered around attracting people who want to focus on adding value to everyone else as opposed to what they’re going to get out of it. And so, it’s been a big passion project of ours for a long time and the reason why the quality of the people has been so good. I got asked this question a lot in the early years, and I never had a good answer for it because I just said they’re great. Yeah, we have great people, we have a good process. And it sounded like I was a company touting my customer service, but couldn’t explain it. I was just like, you have to become a customer to see what all the fuss is about.

And then one day, it occurred to me and it was the revenue that I was generating from my wealth management practice that allowed me to really be able to stick to my guns in terms of who was a good fit for our community. And it allowed us to curate it a little bit more aggressively and a little bit more intentionally because I didn’t need anyone’s $500 to pay for my kids’ 529 account, and I didn’t need to bring in people that were not going to be a great fit or that I felt like I was making an exception in either business eventually, because I got to focus on who was a great fit in each scenario.

And I think that’s one of the real underrated benefits of having two things going on side by side at the same time is that you have some income coming in. You get to have the courage and the ability that maybe you wouldn’t have with just one business to really be able to say, yeah, you’re a perfect fit and you’re not.

Justin Donald: Yeah. I love that. We do that in the Lifestyle Investor Mastermind as well, because I do think the type of people that you allow in, there’s a culture that’s created and there are things that people do say, act, just it’s how people show up. There’s certain types of people that can really ruin it. And so, we’re so hardcore about who gets in. It’s part of the reason why we have an extensive interview process and why we’ve got a board that actually makes a decision. So, it’s more than just one person. And we even have a member board now that has been super helpful. But we definitely, part of our thing was how do we stick to 100, we’ve been at or around 100 people for about five, six, seven years, six and a half years, something like that. And we just opened it up this year and…

Derek Coburn: That’s true. It’s been about our sweet spot.

Justin Donald: Yeah. And by the way, all the numbers basically say like 75 to 150 is the sweet spot for this type of events and communities. And so, we just opened it up to 125 and so, we had a live event where a bunch of people were invited and joined. And so, we’re probably sitting like 115 right now, but we are so hardcore about who gets in, and that has made all the difference in the world because instead of going to a group like the– I have so many friends, as I’m sure you do, that run Masterminds and what they want more than anything is more members and more revenue. And so, they grow really big and maybe they’re accomplishing those goals, but it means for those of us that join, we have to meet a lot of people who are not maybe aligned in values or same mindset to find the ones that are. And I was like, what would it be like if every person, 100% were the people that a new member would want to meet and would resonate with? And that’s been a game changer for us.

Derek Coburn: No, definitely, man. Yeah. And just to connect the dots for anyone listening right now that you and I do not– if it went away tomorrow, I think I’m speaking for you, but if our masterminds went away tomorrow, it probably would not affect our lives at all, right?

Justin Donald: Correct.

Derek Coburn: We’ve got the money and other places to where we get to show up and just be really intentional about who we bring in. And there’s groups out there where it’s their only thing. Like, that’s the only way they’re feeding their family based off of the people that they bring in. And they might be great people and they might have great intentions, but that is going to trickle over into their process whether they wanted to or not.

Justin Donald: Yeah. That will have an impact on membership. It will likely have a negative impact on member experience. And so, I would assume for you guys, yeah, our retention’s really high. I would assume yours is too, based on the tier or level of the members. You just have the right fit people and man, they just want to continue on with the community. And also, it’s fun finding people that, at these high price points, they don’t bat an eye because they’re just crushing the game of business and life and finances and wealth creation. And that’s exactly who the other members want to be around.

Derek Coburn: Big time, yep.

Justin Donald: Yeah. So, how do people find out more about you and about what you’re up to? How do they find you? How do they get your book?

Derek Coburn: Yeah, my website, DerekCoburn.com, is where I’ve got all the information for how to order my book. I’m really excited about it. I think it’s going to make a big difference. It’ll be on all the places where you can buy books. People want to check out Cadre, that’s cadredc.com. But I’m really excited to enter this next phase where it feels really nice to be in a spot where I don’t need to get anything out of this book, that I can just show up every day looking to give, looking to add value, looking to grow an audience of people that I think I can help and support without feeling like I need to make money off of them in some way.

Justin Donald: Yeah, I love that. And I just want to say, for those of you that are considering a next step and leveling up, I just challenge you to join a mastermind, join Cadre, join Lifestyle Investor, join another one that we’ve never even talked about.

Derek Coburn: MastermindTalks.

Justin Donald: Yeah, MMT. I mean, just join something because I can’t even begin to articulate the value that has been created in my life around peer group and mentorship. Like those two things, the reason I am where I am today is because I’ve had people that I have– they’ve poured into me. I’ve been allowed to pour into them and just be able to ask whatever questions I need to ask and just watch and emulate what people are doing. And so, there are tons of great groups out there at all different price points. So, wherever you are, my challenge to you is just pick one, find one, and join it, and you’re going to get hooked because it’s the greatest experience. It’s the greatest way to learn and grow. And you do it through friendship and experiences and learning and travel. It’s wonderful.

Derek Coburn: I agree.

Justin Donald: Very good. Well, Derek, thanks so much for joining us. I appreciate you being on. You shared all kinds of great information today. And I like wrapping up every podcast episode with a question to our audience. So, if you’re watching or listening, what is one step you can take today to move towards financial freedom and really move towards a life that you desire? It’s on your terms, not like most people who live a life by default, but a life by design. Thanks, and we’ll catch you next week.

Derek Coburn: Thank you.