Guidant Financial Group - Financial Services

During the last the last 10 years, Jack Winslow, 53, of West Bloomfield, Mich., worked four different jobs within the auto industry. “And each time the company I worked for downsized, moved or went out of business,” he says. “I just got tired of it, and I knew that it was only a matter of time before [my current employer] joined the list.”

As Winslow watched the casualties from automotive layoffs mount, he thought about his long-held dream of owning his own business. “I realized it was now or never,” he says. So Winslow made one of the boldest proactive moves of his life: he left his job . . . to become his own boss and purchase an existing Fast Signs franchise.

But that purchase would require money he didn’t have. His anxiety level was already high enough, and he didn’t need the added burden of taking on a massive loan then worrying about paying it off. Winslow did, however, have substantial savings in his 401(k) retirement account. Since he was still a long way from retiring, the challenge was finding a way to utilize those funds now and avoid taking a distribution and paying penalties.

That’s when Winslow learned about self-directed IRAs – a concept that some still refer to as “the best-kept secret” in the investment industry. Although investing one’s retirement monies tax free into franchises and other businesses has been a legitimate option since the mid 1970s, only recently have increasing numbers of investors come to realize the extraordinary benefits of using this type of structure for funding small business ownership.

Many of those investors are displaced workers or, like Winslow, they are employees who no longer trust the security of their jobs. In depressed communities or within industries in crisis, people are turning to inventive and nontraditional ways to gain financial stability. Unfortunately, the concept of self-directed IRAs is still unknown to the majority of investors.

Says Winslow’s wife Natalie, “People just aren’t aware of the possibilities of using 401(k)s to finance a business. Lots of people [here] are getting bought out by the major automotive corporations and have a nice stack of money available to invest in small businesses. . . . Many people are leaving, putting their houses on the market and finding security elsewhere; but some people are staying and starting small businesses.”

While the interest in self-directed IRAs is growing, there are still only a handful of companies skilled in setting up these specialized accounts that allow for purchasing businesses as IRA investments. After researching his options, Winslow chose to work with Guidant Financial Group, a respected retirement-account facilitator based in Bellevue, Wash. “I really needed Guidant to make sure everything was being done correctly.”

Winslow had reason to be concerned that every “i” was dotted and every “t” was crossed. The creation of self-directed IRA accounts includes rollover transactions, reams of paperwork, compliance with IRS and Department of Labor regulations, and lots of detail work. And if it’s done incorrectly, IRA holders could find themselves hit with huge penalties and their entire account dissolved.

Winslow called the company to discuss his situation and his dreams of franchise ownership. “Everything sounded right, and everyone I talked with at Guidant was knowledgeable. It was exactly what I was looking for.”

Within two months after signing with Guidant, Winslow took ownership of a “Fast Signs” franchise in Birmingham, Michigan. “I made the purchase in early February and we are right on target with our expectations,” says Wagner. “It’s a lot of hard work, but it’s nice to be in control of my future.”

Wagner is such a convert of self-directed IRA financing that he hopes to spread the word to others in Michigan who feel like they’ve hit a dead end. “I’m looking into doing some presentations about layoffs and the business funding solutions Guidant offers,” he says. “In my opinion, the future of Michigan is dependent on small businesses.”