Despite frequent media coverage of highly successful investors and widely available information about their strategies, studies consistently indicate that growing personal wealth is an undertaking where most US citizens miss their targets. This underperformance persists in a country where about 60% of households own taxable investment accounts, which include stocks, bonds, and mutual funds. With regards to individual investing, the predominantly disappointing results are attributed mostlyto psychological factors and unrealistic expectations. According to the 2017 edition of Dalbar’s Quantitative Analysis of Investor Behavior study, psychology is the main reason for shortfalls ahead of lack of capital to deploy. In its Global Investor Study 2017, Schroders found that “emotion plays a significant role in how people make decisions about their finances,” which seems to have a strong correlation with unrealistically high expectations for annual returns. Notably, Schroders also established that investors are keen to improve their knowledge, with 88% of respondents stating they want greater financial literacy.While expert advice is necessary to mitigate risks and maximize performance, investing in securities to build a nest egg is an entirely different proposition from pursuingwealth generation through involvement with a business venture. In the latter case, the multitude of factors that come into play exceed the capabilities of personal finance advisors and require the expertise of a specialty lender, says seasoned industry executive Jim Plack.
With investing in a business opportunity, the goal extends beyond dollar amounts, making it essential to consider wider implications that connect deep, nuanced knowledge of the potential investment to market and profit metrics. Analyses of this kind require expert knowledge and profound insights into unique and often highly complicated subject areas such as real estate and master limited partnerships. Specialty lenders will be qualified to propose a suitable deal structure and access critical information through their expert networks, which will significantly reduce due diligence costs. These are the types of advisers who know what questions to ask in relation tothe specific investment project and how to analyze the pros and cons of the targeted industry.
A long-time executive at the highest corporate levels and currently a leadership figure at Democracy Capital, Jim Plack has first-handexperience of the advantages that specialty lenders can offer due to their knowledge of growth strategies, revenue potential, financing, and cash flow needs in a specific industry. They are trained to identify the strengths, weaknesses, gaps, and opportunities in objectives and then match the client with the appropriate provider of capital and location for investment. Companies like Democracy Capital tap into their networks of experts to gather information and determine if the investor’s expectations are consistent with market trends. Besides providing data on new business ventures, they assist with the purchase of commercial real estate and the compilation of pro-forma statements around investments. Since financial involvement in a growing company requires an appreciation of its business and the value of its assets, it is crucial to find advisers who understand more than just dollars and cents, according to the veteran executive.
After 11 years of serving American Bank, Jim Plack transitioned to the leadership role at Sports Capital Lending in 2015 and also became the CEO of South River Capital a year later. In 2017, the strategically focused entrepreneur partnered with another former leader of American Bank to launch boutique specialty lender Democracy Capital, bringing his vast industry expertise to a company focused on niche real estate loans, bridge financing, and credit for professional athletes. Jim Plack holds a bachelor’s degree from the University of Baltimore and an MBA from the Universityof Maryland’s Robert H. Smith School of Business.