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Capital Club Radio

Kenneth Shilson: Big Opportunity in the Auto Loan Bubble

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FLOCK Specialty Finance and Capital Club Radio, present an exciting interview with Ken Shilson, founder and President of the National Alliance of Buy Here Pay Here Dealers (NABD).

KennKenneth Shilson CCReth B. Shilson, CPA, is President of Subprime Analytics, a consulting company which provides subprime portfolio analysis services and custom credit scoring solutions (Profit Max). The firm also delivers due diligence services for banks and financial institutions that supply capital to the subprime auto industry.

Ken has helped pioneer an IRS approved tax strategy for “Buy Here Pay Here” (BHPH) dealers regarding the use of a related finance company. He has authored numerous articles on accounting, tax and other matters related to the used car industry. He has also been a speaker at several automotive national conferences and conventions.

In 1988 he founded NABD, a highly successful special interest and education group for the auto Industry. In 2015 Ken was admitted into the NIADA “Ring of Honor” (Hall of Fame), for his contributions to the BHPH industry.

Ken is a graduate of Miami University, Oxford, Ohio.

Here is a glimpse of what Ken shared in the interview.

When I started my CPA firm I wanted to find a niche market that had growth potential … the auto finance market was an industry that presented a large opportunity. Most CPA firms were only interested in servicing franchise new car dealers. No one wanted the used car market.   Being contrarians, we became the experts in subprime auto financing and ultimately became the largest CPA firm in that niche.

Our country is car dependent! Buy Here Pay Here auto financing is extremely important to the US economy; it provides auto transportation to millions of Americans that do not have the ability to acquire traditional financing.

There is a fundamental difference between obtaining credit from an Independent Auto Dealer and a finance company. Independent Dealers provide customers with more than financing; they provide a transportation solution. They want to keep the car running for the life of the contract by offering maintenance and repair solutions.

There is a bubble in the auto finance industry due to the securitization of auto loans – similar to the mortgage industry- where the defaults eventually affected the bond yields. This bubble of pending defaults will create an opportunity for the deep subprime independent auto financers.

Successful entrepreneurs do not follow others. They find a niche that is different and is underserved. To do this, it requires good financial management of your business. Financially, you have to know what you are getting into, you have to understand your capital needs and know where the cash is coming from.

Listen to the full interview with Ken Shilson by visiting us at www.flockfinance.com or clicking the below link.
About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for leaders in the middle market segment which has typically been underserved by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance.

For more information about Capital Club Radio, visit the FLOCK Specialty Finance webpage at

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Guy O’Brien: A Brander of Commodity Bulk Purchases

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CCR PhotoGuy O’Brien is the founder and CEO of Bull Bridge Capital, a broker in subprime auto finance.  He was previously the face of Innovate Auto finance as the Vice President of Sales and Marketing. Under his leadership, he implemented strategies to increase market share and contemporize the brand.

Guy is recognized as a subprime auto expert and regularly speaks at national level industry conferences to educate the market on such topics as strategic selling, negotiating, and organization issues that inhibit performance.

Here is a glimpse of what Guy shared in the interview.

The Buy Here Pay Here (BHPH) industry provides a great opportunity for the purchasing of bulk credit portfolios.  The return is there, but each dealer or related finance company has their own way of doing business, No two are alike. You have to dig in and understand how they make money for you to make money.

We built our brand by segmenting the market.  This segmentation was done by evaluating capital and platform constraints.  We educate and influence the sellers on what makes a good deal.  We are known for our ability that aligns the seller and buyer.  This is accomplished by reducing the misunderstandings between them.  That is our brand. It is more than price.

The work begins beyond the funding.  For a bulk purchaser to receive anticipated yields from a purchased portfolio, understanding the collateral, the deal structure and the consumer is critical.  All three have to be consistent.  Too many times buyers just focus on one or two of these elements and expected collections are not met. 

Most dealers in the BHPH market have a good brand for selling cars, but they usually have capital or platform constraints that stop them from growing.  We help them extend their brand by buying and servicing their accounts so that they can focus on what they do best. Sell cars.

I am a believer in valuing human capital and servant leadership. We need to understand the heart of matter and the motive of the sale. More than price is a lot to talk about. Branding has to be built around relation base selling and the recurring needs of the seller.

Nick Papeo: Keeping the Dream Alive

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Mr. NicholasNick Papeo Papeo is the founder and CEO of several companies comprising the Financial Debt Recovery Limited (FDR) group of companies.  FDR has evolved from a third party collection agency into one of Canada’s larger accounts receivable management and debt buying organizations.  To date FDR has received over one billion dollars in assignments, created specialized recovery programs for governments and represented Fortune 500 clients throughout North America.  Additionally, FDR has acquired approximately one billion dollars of charged-off private label credit card, bank credit card and loan debts.

Here is a glimpse of what Nick shared in the interview.

The dream was started in 1992 with 2 people counting myself.  Sales calls were made in the morning and collection calls in the afternoon.  I knew there was a voided space for collections in the Canadian market.  Today, 25 years later, the dream is alive with over 200 people in the company.

We built this company on sweat equity and taking risks.  In 1995 we were a contingency collections agency.  We worked hard and provided our customers with a quality product, but we knew that if we wanted to get more return for our work we would have to change. We took a risk and became one of the first debt buyers in Canada.

To keep the dream alive, the focus was on attracting the best people or “company ambassadors” who understood how to protect the brand of our customers. These “ambassadors” were rewarded and recognized for helping us create a culture focused on determination, hard work, and skill level.

Today’s metrics for collectors and debt buyers are different than when we got started.   Twenty years ago it was about building a strong relationship with your customer.  Today, it is about protecting their brand and the use of a score card on how you look after their brand.

All markets are challenging.  We work in an imperfect space and to level the playing field is a challenge.  To be worthy in the customer’s eyes requires understanding their brand, out of the box thinking and creating a strategy.  If we do this right, we keep the dream alive.

 About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for leaders in the middle market segment which has typically been underserved by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance

Manny Newburger: Master of Martial Arts in Law and in Life

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Manny NeM Newbergerwburger is one of the leading regulatory attorneys in the debt buying and collection industry and known nationally for his expertise in consumer and commercial law. He is retained frequently as an advisor and consultant on FDCPA compliance issues worldwide and on the defense of Fair Debt cases throughout the United States. His extensive legal and industry experience, and his depth of knowledge on effective practices, are consistently sought out by law firms, collection agencies, debt buyers and creditors, to negotiate, defend, advise on, or testify in complex, technical matters.

Mr. Newburger is also an adjunct professor at the University of Texas School of Law where he teaches consumer protection law, and was admitted to practice before the United States Supreme Court, the United States Courts of Appeals in multiple districts, all United States District Courts for the State of Texas, and many other jurisdictions. Mr. Newburger is the principal author of Fair Debt Collection Practices: Federal and State Laws and Regulations (Sheshunoff & Pratt) by M. Newburger and B. Barron.

Here is a glimpse of what Manny shared in the interview.

Don’t let your limitations be an obstacle. I can’t think of many things I can’t do. You’d be surprised, everything can be adapted. There always another way to do something. I did martial arts for 20 years. That is reflected in the way I practice law. A lot of what I learned about negotiations I learned in martial arts… a non-confrontational approach.

 There are many things that should align with the principle of “respect for the individual”; it always surprises me that people don’t see it. “Treat people well, they pay you money.” I’ve always believed that compliance does not mean an inability to collect; it has to do with the way you go about the collection process. Even as a litigator – if someone treats you like a truthful honest person you tend to testify like a truthful honest person.

 “Understanding the product”, is a common denominator of success across new asset classes in the industry. You better understand the host of unique issues that can arise in each segment.

 Over the years, I have looked at problems and said, “What if we don’t do things the way we’ve always done it. What if we change our paradigm and try to go about this differently.” I won’t claim it always works, but when it does, it sure is great.

 “Strategy without tactics is the slowest route to victory. But tactics without strategy, that’s the noise before defeat.” – Art of War

About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for leaders in the middle market segment which has typically been underserved by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance

Jim Richards: A Builder of Businesses and a Rebuilder of the Collection Industry

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Jim Richards

Jim Richards is the current President of the Association of Credit and Collection professionals (ACA).  He is the co-founder and board chairman of Capio Partners, one of the leading healthcare debt buyers in the U.S., and previously held key executive roles with significant industry leaders including GC Services, Medaphis, and Attention, LLC, a start-up that eventually became West Asset Management.

Jim has just recently launched a new organization, the Institute of Collection Leadership (ICL), an assembly of the larger agencies, asset buyers and law firms. Jim’s primary goal for the ICL is to use the “time, talent and treasure” of these large organizations to find new and meaningful ways to influence and change the perceptions on how the industry is viewed.

Here is a glimpse of what Jim shared in the interview.

Today’s regulatory environment is much more information driven. It is essential for the industry to get its hands around “real validated data” and be able to specifically measure the changes. It will take specific, supportable data as evidence of changes to truly affect the broader perception of the collection industry. 

I’m talking about changing the reputation of the industry. Years ago, having a negative perception of a collection company was probably not so bad. It helped people pay their bills.  They were concerned about being in collections but the world has changed.

At GC Services we coined the term “Early Out” back in 1981. At that time we weren’t being paid commensurate with the results we got on “In House” accounts and we were under the purview of the client. So when challenged by their sales department to continue working those accounts, , we said, ‘No, if you want those early accounts worked, you’re going to have to take them out and work them in our shop, so we can manage them ourselves, and voila, “Early Out”. Later we sold American Express on their first ‘Early Out’, then GE.    

You’ve got to care for people. It’s all about people. Whether it’s your clients, your employees or your shareholders. You have to keep those three groups happy. But probably what drives me is that I get a kick of doing things that are difficult or other people haven’t done.

About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for leaders in the middle market segment which has typically been underserved by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance

Trish Baxter: A Profile in Grit and Grace

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Trish-Baxter

Trish Baxter currently serves as Compliance Officer for Recovery Management Systems Corporation, a bankruptcy debt purchaser and servicer.  Trish also represents clients in the ARM Industry regarding regulatory compliance and litigation matters.

Her prior industry roles include: General Counsel for Collins Financial Services in Austin, Texas, and as General Counsel for Unifund in Cincinnati, Ohio.

In addition to serving in the Debt Buyer Association as the new President and Chair of the Ethics Committee, Trish volunteers with CASA of Travis County in Austin, Texas as guardian ad litem for children in the child welfare system.  She is also a stage-four cancer survivor.

Here is a glimpse of what Trish shared in the interview.

“In challenging times there are always competing interests with various constituencies inside organizations.   To manage and balance these interests one must offer all individuals dignity and respect.  This is accomplished by listening to what they believe. This keeps communication lines open to deal with the various interests.

“To compete in today’s regulated environment, each company first has to make the decision if they want to play in a regulated environment.  You cannot do business where you cannot make the compliance commitment.  You have to understand the compliance risks and make a decision about the costs.

“As a cancer survivor, I learned that you do not control the future, but you have control of your choices.  When adversity arrives, you have to be an advocate for yourself.  You have to understand the choices, consider the risks, then have the courage to make the decisions and take the actions.”

 About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for leaders in the middle market segment which has typically been underserved by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance.

Past Debt Buyer Association Presidents in Vegas: From Gunslinger Culture to a Consumer Friendly Culture.

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IMG_8463 (1)At the recent DBA International convention in Las Vegas, Capital Club Radio’s Michael Flock interviewed five past DBA International presidents whose administrations spanned the 19 years of the association’s existence: Walt Collins, Bob Morris, Mike Cushing, Mike Bendickson and Rich Munroe.

 

The following is a glimpse of the key topics discussed.

DBA was created to give creditors and government regulators confidence that the debt buying industry had credibility and quality.  As an industry association, DBA would create the ethical standards and best practices that would assure creditors that they were not dealing with “gunslingers”.

According to the past presidents, DBA was founded on the spirit of revolutionizing the collections industry.  Debt buyers had a different belief about how to collect than collection agencies.  Debt buyers took a more consumer friendly approach because they had more motivation and patience to work with the consumer to find solutions.  Collection agencies needed to get payments in 3-6 months.  Debt buyers have a longer period of time to help the consumer with options that would enable them to recover and get back into the credit cycle.

From its beginning through today, DBA has seen its purpose as the provider of best practices to demonstrate to creditors, regulators, funders and debt buyers that there are proven behavioral and procedural standards and that the industry is self-regulated.  In the beginning, these practices were the cornerstone for creating the industry.  Today, through the certification program, DBA has demonstrated that debt buyers can provide an effective collections solution in a regulated consumer centric world.

Over the years, one of the key strengths of DBA has been its culture.  This culture has been created by the shared values of seeing the debtor as a consumer and encouraging competitors to work as a team.  The collaboration of various members has encouraged the  creation of recovery solutions for the industry,  while also developing new skill sets  for debt buyers to deal with the ever- changing industry challenges.

About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for leaders in the middle market segment which has typically been underserved by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance.

Stacey Schacter: Mentors Make a Difference

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S Schacter

Stacey J. Schacter is President and CEO of Vion Investments which focuses on receivable buying, servicing and collections in the financial services industry. He also serves as President and Chief Executive Officer of Briannaco Investments.

Stacey has also served as President of OSI Portfolio Services; President, Chief Executive Officer and Chief Legal Officer of EMCC, Inc.; and attorney and advisor to several debt and receivable purchasing firms. He was a practicing attorney from 1988 to 1999 and is a member of the Ohio and Massachusetts Bar and is authorized to practice before the U.S. Supreme Court.

Here is a glimpse of what Stacey shared in the interview.

 My family did not make a lot of money.  My father came up through the great depression, and held down many jobs so that I could go to college.  I learned the value of hard work and other principles from him.  Yes, I would have to say he was my first mentor and from him, I learned that everyone has an obligation to mentor. 

 Mentors come along all through your life.  You have to be open and accepting to what they have to offer.  For example, Arthur Levine had a reputation for “chewing through people”.  He was still a great mentor when it came to negotiation, or how to get the deal done.  You have to understand what the seller is trying to accomplish and structure the deal around their need.  It is not just thinking about the cash.  Most mistakes have been made in the analysis of the person and not the numbers.

 We need an economy that fluctuates.  This fluctuation or adversity is what causes opportunities.  We started out purchasing performing assets, but the market provided us a great opportunity in charged off debt.  The market has now shifted and we are back focusing on other opportunities that have been caused by disruption or distress.  You have to take risks and believe that the next great deal is around the corner.

 If you are open, mentors can be all types of people.  They can be your employees or people who have made mistakes.  You can learn from an experience, like when I sold men’s shoes.  My success came when I learned to talk to people and see what they wanted.

Matt Maloney – Creating a Legend vs Creating a Legacy

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M Maloney w MRF

Matt Maloney is Co-founder, Chief Investment Officer & President of several companies under the FFAM360 Group (First Financial Asset Management) and is responsible for the strategic growth and development of the company.  He is active with ACA, DBA and Experian user groups, holding multiple positions on boards and panels.  He has co-authored one of the industry’s official Due Diligence Guidelines Manuals for Debt Buyers published by ACA International.Matt was born into the industry.  His family owned a collection agency.  But as the family’s business transformed and grew, Matt thought his career would be something other than working in the industry.  If he were to work in the industry, he wanted his children to know the difference between creating a legend vs. creating a legacy.  Creating a legend was about what he could accomplish.  Creating a legacy was about building a business that was a service to both the industry and the community.  Creating the lasting impact of a legacy would become Matt’s focus.

So in 2001 Matt along with his father started a company to buy and finance accounts receivables.

Here is just a glimpse what Matt Maloney shared in the Interview.

There usually is a significant learning curve when moving into new markets or asset classes.  To gain this knowledge, we purchase companies with solid platforms that are less than 50% the size of our company to “tuck in”.

Purchasing a company is more than just understanding the numbers.  It is about how things really work.  Who has the relationships with whom and are they part of the acquisition?

We bring a holistic approach to healthcare. We purchase multiple types of asset classes within the supply chain.  Moving forward the cash flow is a differentiator.  The focus is on providing a capital solution.

Using the family history to build a solid a company and legacy requires staying focused and empowering others to help grow the business.  For the entrepreneur, this is not easy at times.  It is hard to empower when your house is at risk.  Most people do not appreciate the life of an entrepreneur.

About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for middle market business leaders who have been underserved by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance.

Irwin Bernstein – From Risk Taker to Risk Manager

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Irwin Bernstein

Irwin Bernstein is the founder of CMS Services, an online tool created to simplify the gathering, sharing, reviewing and updating of data for an ARM firm’s Compliance Management System.  Additionally, he conducts CFPB readiness exams on behalf of creditors and debt buyers.  He is an attorney and CPA with over 30 years in the financial services industry.  Irwin is also the CEO of Allgate Financial, a provider of outsource management, wind-down and back office services to the debt buying industry.

As a debt buyer and outsource agency manager, Irwin has conducted scores of industry reviews for his own business and on behalf of creditors and debt buyers and has participated in the acquisition of over $6 billion of consumer debt portfolios.  The good and bad times as a risk taker have provided him with key insights that make him a better risk manager for others.

Here is just a glimpse what Irwin Bernstein shared in the Interview.

Collections is an entrepreneurial industry.  The common denominator for the good middle market agencies, law firms and debt buyers is the culture of servicing others. These companies have a spirit of compliance and wanting to help others.  It can be observed by how they deal with both employees and consumers.

We need to understand the spirit of the CFPB and work with them instead of focusing on destroying it.  Regulation has been part of the financial services industry for years.   Meeting today’s stringent compliance requirements is a minimum threshold to participate in the Accounts Receivable business.

Common values are the foundation for building business relationships. Relationships should be built around a hand shake and not a contract.  The ongoing performance of the relationship is derived from the daily sharing of information.  Being sensitive to cultural issues is important because overcoming adversity requires people being able to work together.

The future is told to us from the past. Nickolai Kondratieff’s 1926 paper postulated that the dynamics of economic life were not linear but rather cyclical in nature. There needs to be a historical perspective that encourages longer term thinking and, most importantly, to give hope to my five children that they should not be a prisoner to recent history but instead should take advantage of the next great ride that will come.

About Capital Club Radio

Hosted by Michael Flock, Chairman & CEO of FLOCK Specialty Finance, Capital Club Radio provides a forum for middle market business leaders who have been under-served by traditional banking.

Capital Club Radio provides listeners an opportunity to gain valuable business insights and perspectives to deal with market uncertainty. Topics will include: key success factors, both personal and professional, dealing with adversity, outlook for the industry and your business.

The show airs live periodically on Business RadioX and is sponsored by FLOCK Specialty Finance.