Portfolio dealers reap real rewards.
We invite dealers considering a partnership with Portfolio to speak with one or more of our clients about their experience. Meanwhile, read on to learn how some of our clients invested their reinsurance company earnings.
Keeping Wings on an Angel
One of our clients owns three successful independent dealerships. He is also an experienced pilot who volunteers with Angel Flight West. He personally flies critically ill patients from their homes to distant medical centers to receive lifesaving treatment.
When his plane reached the end of its service lifespan, the dealer discovered it would cost over $450,000 to replace. Rather than going to a bank, he took out a loan from his Portfolio ARC.
In addition to his Angel Flight West trips, the dealer uses his new plane to shop distant auto auctions. And after seeing how useful his Portfolio ARC was to his personal and business life, he refocused his attention on selling VSCs and warranties, resulting in more profits for his dealerships and more wealth in his Portfolio reinsurance company.
“When you see the problems these people are struggling with, it make your own problems seem like nothing,” he says. “Almost all of them have unbelievably great attitudes. It is humbling and very rewarding to help them. This has almost become the reason I get up and go to work each day, so that I can afford to do these flights.”
Primed for a Successful Succession
A Portfolio dealer who owns nine franchises in California is also the proud father of four daughters, all of whom have a role in the group. He knew that a strong financial incentive was the best way to keep them in the family business, so he set up an affiliated reinsurance company for them and a separate ARC for himself.
All agree the growing wealth reflected in their quarterly reports have made them better managers. Now everyone pays regular attention to penetration rates, claims and other factors that affect ARC profitability — just as much as store profits and CSI.
“We are a tight family with a lot of loyalty to Dad’s dealership business,” one daughter reports. “Still, seeing the steady profitable growth in our Portfolio reinsurance company keeps us focused even more on making all the stores the best they can be.”
Overcoming Two Tragedies
When the founder of a South Carolina Chrysler Dodge Jeep Ram dealership died in a motorcycle accident in 2003, his family bravely decided to keep the business going. His eldest son, then only 25, took over day-to-day operations. His wife retained ownership and, recognizing that life can be unpredictable and knowing she needed to start getting the most out of owning the dealership, she chose to create a Portfolio ARC that same year.
By 2008, the dealership had become the No. 1 CDJR store in the Carolinas. And with help from their Portfolio ARC, the family was able to buy the franchise. Then, tragically, that same year, another accident claimed the eldest son’s life.
Again the family pulled together and persevered. The younger sons took over as dealer principal and new car manager. They are now enjoying the benefits of their own Portfolio reinsurance company while their mother’s ARC, now in runoff, provides her a valuable source of retirement income.
“When people ask me how we have overcome these tragedies, I say it comes from our faith, the love in our family and honoring my husband’s legacy, which was always about service to others. That’s what keeps us going,” she says. “But I must add that this is a business too, and having our Portfolio reinsurance companies as a personal wealth asset and source of loans played an extremely valuable role along the way. It was one of the best decisions I made in those early days as a dealer principal.”
A World-Class Recruiting Tool
Owning and running multiple dealerships is no easy task. Ten years ago, one large, family-owned group needed a top talent to manage its nine rooftops. A nationwide search led to a longtime Ford executive.
Recruiting at this level goes beyond salary and benefits. Fortunately, the auto group had been a Portfolio dealer for some time. They were able to set the executive up in a Portfolio reinsurance company, offering a share in the group’s profits and a new way to build personal wealth.
The former Ford exec remains the group’s GM to this day and says he couldn’t be happier with the ultimate “employment benefits” that come from owning a Portfolio ARC.
“I dearly love the car business and the dealer group I help manage,” he says. “I don’t even entertain offers that come knocking on the door to make a change in my career, given my Portfolio stake in the business. My current deal is creating more wealth for me than any recruiter’s offer out there.”
The Path to Prosperity
One dealer client initially signed with Portfolio after learning reinsurance would reduce his tax liability by allowing him to pay full rate only on the investment income. He started an ARC for each of his three franchised dealerships.
A few years later, he decided to open a buy here, pay here operation. He sought outside financing and obtained a loan with a 9% interest rate. The future was bright. Then the 2008 recession hit.
The dealer’s decision to create Portfolio ARCs saved the day. He was able to pay off the outside loan and take out $3.5 million in loans from his reinsurance companies to create his own captive finance company. He can finance BHPH customers at market rate and pay his reinsurance companies a healthy return on the loans. He credits Portfolio with making him financially independent.
“Portfolio has enabled me to build millions more in personal wealth for my family and my future. Portfolio’s structure and results are exactly what their people represent. They help make wealth and understand our business,” he says. “Plus I now have more options to give back to our community, and my priority there is to help kids understand how to succeed in business. I would tell all dealers to sign up with Portfolio now, without reservation.”
Going Solo in Colorado
True entrepreneurs are known for their independence and vision. One of our clients owned and ran six stores with a partner in Colorado’s Front Range region. They both started with Portfolio about 10 years ago, and both became wealthy as a result.
But our client wanted to run his own store, and he loved the Kia franchise model. With a loan from his Portfolio ARC, he bought his partner out of a Kia store and struck out on his own. That dealership is now advertised as the region’s Kia Superstore, and he has since added a second Kia franchise, again buying and capitalizing with a loan from his Portfolio ARC.
“It’s so much easier and more profitable to borrow money from my own Portfolio reinsurance company,” he says. “It gives me the power to move quickly on opportunities that I see.”
We Need a New Sign
Sometimes big marketing decisions incur big costs. That’s what the owner of a Los Angeles-area Ford dealership discovered when he sought a new way to drive more traffic.
He and his senior managers decided that the dealership, which is surrounded by tall buildings but ideally situated on a busy freeway, needed greater visibility. The answer was a large digital sign advertising the location and deals of the day.
Not being in the sign business, the dealer was shocked to learn it would cost $150,000. Most dealers don’t have that kind of cash just lying around. But it was a necessary expense. So he took a loan from his Portfolio ARC to get it done. His business has doubled in the seven years since the sign went up.
“Although I get regular quarterly reports from Portfolio about the money in my ARC, I sometimes forget I have this financial asset I can use for the unexpected,” he says. “Getting the loan from Portfolio’s management team was pretty easy, and it helped me build my business.”