Richard Desich Sr - Self-Directed IRAs: Building Retirement Wealth Through Alternative Investing

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by John Bowens, Equity University National Education Specialist

Equity Trust Company is a leading custodian of self-directed retirement accounts with over 130,000 clients in all 50 states and $12 billion of retirement plan assets under administration. Despite its successful growth over the last four decades, Equity Trust Company came from humble beginnings and is still a family-owned-and-operated Company.

Richard Desich, Sr., the Founder and Chairman of the Board, grew up two blocks away from a steel mill in Lorain, Ohio. The value of hard work and education was instilled in him from an early age. After serving four years in the United States Armed Forces, Mr. Desich attended night classes until he graduated from college.

After putting himself through school he quickly rose through the ranks and become one of the top financial advisors at a brokerage company. Mr. Desich experienced stock market volatility firsthand and yearned for another solution.

Just like you, he would not accept the status quo and was searching for a way to diversify his portfolio.

He had been exposed to real estate as a youth because his grandparents (who raised him) operated a small rental unit on their property and he remembered the steady residual income they received from the unit. With his mind racing with ideas and opportunity he asked himself, Why couldnt I invest in real estate like I invest in stocks and bonds?

At this point in 1974, Mr. Desich had already established his own brokerage firm called Mid-Ohio Securities. He knew he was on to something but investing in real estate with your IRAwas this even legal?

He wanted to take advantage of the power of compounding interest within a tax-advantaged retirement account, but was still skeptical. It sounded good on paper but, like you, he wasnt sure if it was real.

Since IRAs were fairly new at this time, Mr. Desich sought out one of the top ERISA attorneys in the country. (An ERISA attorney is someone who specializes in the tax laws as it relates to retirement investing.)

He took a leap of faith and spent thousands of dollars to learn that the Internal Revenue Code in fact permits non-traditional investments in an IRA.

He saw how powerful this strategy could (and would) become, but like many of you, still had his doubts. He was skeptical. Why had he never heard of this? Why wasnt anyone doing it? Even his trusted CPA hadnt heard of the concept.

In his research Mr. Desich learned that most brokerage firms didnt offer alternative investing options (within or outside an IRA). He learned that the banks didnt offer it either.

So now it made sense. He understood that it was legal and possible, but he needed to know what he was allowed to invest in with his IRA.

His ERISA attorney told him that a self-directed IRA is no different than any other IRA with another financial company. The only difference is that you can choose the types of investments that are suitable for you. He was able to choose to diversify his portfolio into assets such as real estate, precious metals, tax liens, and all types of other options rather than relying on only the stocks, mutual funds, and other traditional assets offered by most custodians.

As he continued to research, his ERISA attorney told him that he would need a custodian to invest with a self-directed IRA.

He eventually found one that was a bank trust department and was shocked at the price they were going to charge. How could he grow his retirement savings and build wealth with such a high cost?

Well as Im sure youre learning, Mr. Desich wasnt about to let something like cost hold him back from an opportunity he believed in. He decided to take the bull by the horns and petitioned the IRS until he was able to turn his brokerage company into its very own passive custodian!

Finally after years of research, hard work, and hundreds of thousands of dollars in attorney and research fees, he knew he could move forward with his idea. In 1983 he received IRS approval for Mid-Ohio Securities to become a passive custodian for self-directed IRAs.

This approval was necessary to facilitate self-directed investments, including the Companys very first one an investment in a local pharmacy in Lorain, Ohio.

In 1984 Mr. Desich and a group of 22 investors purchased the Ohio drug store. Each investor put in $6,000, and over the next 19 years the investors each made nearly $200,000 through the triple-net-lease investment. The returns far-outpaced what they were currently receiving with their traditional investments and, soon after, other clients approached him to help them learn how to diversify into alternative assets as well. From that moment, an industry leader was born.

Mr. Desich has a passion for education and has made it his mission, and the Companys mission, to educate investors around the country about the power of self-directed IRAs. Mr. Desich had the foresight to see the tremendous potential in the self-directed IRA market and has fought to better educate investors so they have the opportunity to tap into this potential as well. Mr. Desich believed everyone should be able to take advantage of these investments, not just the wealthy.