Ep. 350: Barry Dyke - Laying a Solid Financial Foundation for Any New Business

Let's get started. Well, Barry, thank you so much for coming on the podcast. We're very excited to have you here. You have, you know, over forty years of experience, especially in the world of financial planning. You know, you've written books that have talked about major financial crises.

Now you've worked with individuals, families, nonprofits, you know, and now you're leading, you know, Castle Asset Management. You know, there's a lot of ground you've covered over your career. And so what's the through line for you? What's been the thing that's kinda driven you at all from the beginning?

You know, and this really kinda could flow into anything we we do, whether it be a, you know well, what I do have a planning firm and a publishing company and stuff. But, you know, whatever you do, whether it be a teacher, your accountant, a lawyer, Indian chief, I think, really, it's a a desire really to to be to be good at what you do. And my father, Adam, once said, you know, anytime you do you touch something, you try to leave it better than the way you found it. So that's what I've been trying to do with with financial planning and so forth, and it's been a it's been a wild and crazy ride. You know?

Because the more you know, the more you it's kinda freaky. You know? And when you understand what's under really underneath the hood of the economy, how banks really work and how mutual funds really work or how four zero one k's don't really work. Mhmm. It's it's it's it's pretty discouraging.

So I think, really, how do I get through it? It's really having faith and and always having hope, you know, faith, hope, and love. You know? I guess maybe that may sound corny, but that's that's how I do it. Sure.

But, when it comes to building businesses, sometimes you have to kind of build a good foundation in order to be successful in your organization. And so when you're thinking about a small business owner or somebody who's trying to get things off the ground, what does it look like to get those fundamentals right when you're when you're starting your organization and and laying that foundation correctly?

And, generally, most people should save 10 to 20% of their income in in before into insurance and investment products and so forth. And everyone did that, Adam. We really wouldn't have any problem. Most people but we don't in America. We have I think North Korea South Korea actually is one of the highest rates of savings in in the world.

I think, at around 30%. We're, like, around 4%. So so one of things would be first of all, we we just to save money. Spend less than, you know, kinda common sense stuff. But the more I know about this, the more it makes sense.

So because when you have a pile of capital and you don't have to access the banks or go into things like private credit, which is really a a mess right now Mhmm. You can do a lot more things. So I think it may save first, and then also get getting the fundamentals right, you know, having to make sure you have the proper health care and and disability income and and life insurance and these type of things. The really the the blocking and tackling of any business. Okay?

Because you just don't know. People have young families. I'm doing this a long time. I've actually over my career, I actually paid out 63 for life claims. So I really realized the importance of doing the planning. Now so just getting you know, so essentially, you know, saving first and then investing. That makes sense?

I mean, because sometimes, you know, some of the transactions I've dealt with people, some are involving millions of dollars. And so, you know, they could be stressful stuff. So my point is is that I think we're getting it staying healthy physically. I mean, I I think you mentioned your your children into sports and things like that. Am I correct?

And so I think really, you know, getting outside, you know, getting fresh air, all these things. I think the the the you know, yoga, whatever the case may be, I think these all these things really help. Luckily, I'm I'm I'm blessed. I live on the beach up here in New Hampshire, and then I when I got last time we were talking, I I stayed down on the floor on the beach. So I spent a lot of time on the on the ocean, and, and then it seems to help.

But I think, you know, really trying to take care of yourself first because I think it it we're you were for crazy times. I love this country, but it it's if you study history, and I have been a student of history, the things which we're having problems with the primary, which are the debt, it's it's gonna be crazy. And if you look at the the the prior crisis, the stock market crashed '29, you know, the most recent crisis in 2008, the dot com meltdown. I was always preceded by tremendous amounts of debts. I think, really, you really wanna take care of yourself, but also Mhmm.

Be prepared and get ready for the what's happening in the days ahead. We're this right now. It's more important because we're seeing private credit. I don't know if you've been following us at all, Adam. It's it's really taking hits left and right.

You gotta still try to make money. You gotta still try to do all those things in the midst of all that uncertainty. You know, so how do like, and you gotta, like, oh, I gotta make sure I my employees have good benefits so they stay with me. You know, how does that, like I feel like there's this almost impossible trade off that you have where you're trying to take care of your employees, but also keep your company running, but also not freak out because of all everything happening around you as well.

You know, I and I've had, you know, I don't have I have a couple of people working with me full time now. Don't have as many I had nine people working with me full time, but it's it's a it's a real balancing act. Mhmm. But I think it's a I think it's also part of which which you're I guess, if that business owner out there who who's trying to get the the just the what I do today, and this helps me as any I can't just focus on just me making money. If it's just me making money, I I can't get motivated.

I'm I'm sorry, man. It's just, you know, you you buy a nice car and then what what what's next? Okay? So so I think really the as a business person, you have to say, how many how much is my business or enterprise gonna help, not just myself, but my family, my staff, my clients, my fans, and that type of thing? How many how can I maximize the macroeconomic impact of what I do for others?

Alright? So so that's what that's what kinda gets me excited because let's let's face it. Say, the the retirement system in The United States are freaking mess for for the majority of the population. And so that that that kinda motivates me. And and the truth of the matter is we're in the world league tables, Adam.

We're, like, number 30 in the top 30, and which is horrible. So that kinda gets me motivated. So I'm kind of helping people I'm trying to help people with better retirement and having more safety and seat belts around their money.

And I think that's that's a thing that a lot of people struggle with, especially, you know, if you're living paycheck to paycheck, if your money isn't in a situation where, like, hey. You know, you mentioned you get to travel between two houses that are near the beach. That's pretty cool. Not everybody has that a bill, that option and trying to find that why is difficult at times for people.

You know, we're all trying to fall the yellow brick road, if you will. But I think really having with the end in mind is what Stephen Covey said, you know, you know, what what's the end of mind here? It's like I'm I'm in the process of finishing up a book right now.

I guess maybe whatever you you know, whether it be, you know, having as I say, you get up a daycare center, but I'm saying, whatever that what's that why you wanna do? And that's gonna that's gonna keep people motivated.

I communicate it, and I I I think you have to be an open book about it. The I think communicating is just being open. I mean, it's it's hard because we all wanna I know I wanna give give the boy the store, but this stuff is very, very expensive. And Sure. I think the more people the know about it, I think the more gratitude they have.

And I think and that's one of the things which I I run my life on. I couldn't do things without being grateful. So when I think people you communicate to people how much this stuff is really costing, I think it's gonna help people. I mean, there's there's no silver bullet or panacea, Adam, but I think just communicating the truth because, you know, you know, a lot of these people, you know, are good adults. So I think the more open I think is one of my favorite, sayings.

I don't know if you ever remember the guy. Louis Brandeis, he wrote a book called Other People's Money.

But we've we've our four zero one k system, I think we we talked about the do it yourself model, which is, to me, it's it's just it's it's

So that's just really the the root of any retirement plan. And now and the thing is but if you look at other countries, if you will, who are the best countries for retirement systems, I e, The Netherlands, Iceland, Israel, Norway, England, all these other countries, they're all based upon retirement income. And that is the core fundamental. Now in The US, we've we've turned it into a a casino, a little an online casino with stocks and bonds, which which I tell my friends that or my fans that the k a toaster from Walmart has more guarantees than a four zero one k, which is true. So the whole thing is in The US is that what has happened is that we we've now created a system where it's I tell people, it's like, I take all the part I come go to Adam's house, and I go and I dip all the parts to your car and you do in driveway and say, Adam, put a car together.

And that's what we have for our system today. And then so I'm saying that's wrong. If you look at the best systems in the world or the best retirement systems in the world, they're all income based. The best pensions, if you will, are all, you know, for the state and federal and local and government employees because they all have defined benefits. There's no the true pension plans true retirement plans.

Now we've drifted away from that in this country. So but I think, really, the more you base upon income in retirement, the better off you're gonna be. In America, I was, like, picking up the rest of I when I had lunch, I was talking to one of my assistants. She said, well, Barry well, she was telling me about the stocks. I said, Lisa, I said, you know, the purpose of your retirement plan is to produce retirement income.

Not to gamble with but, you know, you know, we and so I even see people close to me. And so I think we really need to change our mindset. I'm not again, I'm a capitalist. Okay? I love my I love my iPhones and my technology and all that stuff. And I don't believe in giveaways. So but, no, we have we have to rethink how we're actually setting up actual retirement plans these days.

Because I can imagine that there's obviously like, hey. Here's the four zero one k plan. You can just sign sign your name here and give it to your employees. But it I'm sure there's are there ways that they can get out of the typical system in The US?

I think you can go to that URL. Boomermovie. But the Ted Bennett is a friend of mine. He's the guy who actually created the four zero one k. And the k, Adam, was only meant to be like a Christmas tree ornament on a Christmas tree.

It was never meant to replace the Christmas tree, which is the the true defined benefit pension plan. So the reason why we have the four zero one k today is really because it is cheaper of the two, okay, private industry. And that's the reason why it's proliferated because you it's very cheap speaking, and you could have something like a SEP or a simple IRA, which is somewhat similar to that. And it's relatively cheap, and there's no, risk management, if you will, because all the employees bear all the risk. But the thing is that so you have if you're an employee, depending upon a a small business, you know, you may wanna look at things like a, a cash balance plan, which is very popular today, which is a true, retirement plan or profit sharing or a defined, contribution or even perhaps a defined benefit.

It all depends on the businesses, but there are options out there. The institutions just don't wanna sell you. So you have to go to a an adviser or someone like myself really to get the option because there are other options to do that and much better than I'm actually, doing this right now, like, for a pretty successful, medical practice, this weekend. The thing is and we're and we're we're not even putting in the four zero one k. So because we actually I really wanna kinda get out of that.

So so there are options of the whole thing. The thing is that the reason why you're being sold four zero one k is because this is what Fidelity and Vanguard and State Street and BlackRock and everyone wants to push. But you really have to look at which it's which is best for you first, and you have to work with someone who's knowledgeable.

I'm not saying it's a but you really have to look at a lot of and you have to see you have to there's options out there. And I'll tell you the this is the funny thing. I'm setting up this up. It's a pension plan for medical practice and very successful. Okay?

Extremely successful. And and I I was kinda calling just late in the game, but and what happened is that they would change accounting firms or whatever. And the new accountant, they sent in, like, a what do you call it? They they sent a retirement expert from, like, something like Fidelity or Vanguard. No.

It was something like Fidelity or something like that. It's a major institution. And they said, okay. When do wanna set the form I said I said the That's that's that's really kind of the worst thing for this person. I'm not saying that it's not an important thing to do, but so it's not always the best interest.

Okay? Now if you're re if if you're a small employee, you have to have a return retirement plan to recruit and retain the best people because your business goes in and out of the door each night. But I'm saying I'm not saying that the four zero k is it's but not a panacea. Actually, I was one of the first guys to do a four zero k in New England probably about 30 ago. Then so it it but now it which is kinda like the side dish has become the main event.

That's and that's a real problem. But Wall Street and the asset managers like it's it's I'm kinda swimming upstream against that one. You know?

I mean, everything's step by step. But my point is is that probably I would say probably I'm a small business person. I would say probably they're being way oversold. They're way too oversold. Even, you know, you know, I'm an advisory, and, obviously, I get paid on fees and assets under management, things like that.

But I they're way oversold. And, you know, I'm I'm kinda discouraging for some of them because of it. There's there's so much compliance involved with the employer. There's fiduciary risk. So but you you just gotta you gotta be really it's it's not the panacea, but this is what Wall Street's gonna ram down our throats. And that that's I'm just I'm just I'm just a voice in the world in this, Adam. You know?

Okay? They wanna keep keep it complicated with things like target date funds or collective investment trust. Now do know what collective investment trusts are, by the way?

There's no requirement for prospectus. You have to go through the advisory firm to even communicate it, which you really have. Because I've and I I I forget who I Morningstar. It's Morningstar. We're one the top rates.

Roughly, it's about 4,800,000,000,000 or something like that in four zero one k plans now, and more than 54% of it is in collective investment trust, which are essentially unregulated. Now the reason why did they wanna use unregulated funds was so that way they can stuff things like hedge funds and private equity and private credit and get and essentially get away from it. And that's Mhmm. There's a major people don't believe me. The major case going on this is Intel Corporation and who the administration, I think, can put, like, a $9,000,000,000 investment, Biden put invested in as well.

But this is the this is the classic case where they were putting in using collective investment trust. They were doing this in 2008, Adam, and they were Mhmm. Stuffing four zero one k's with hedge funds and private equity, which is not a good idea, but this is, but this is how they're getting around through the side door. All the and all the major asset managers are using CITs. So you have to be really just you just have to be proceed with caution. You know? There's some danger there.

So let's give some people some hope, and let's give them some encouragement on what things they can do because, you know, there's obviously negative sides to everything that is within

As long as you save and you so you have it in the market, s and p 500, and this will be coming out in the next book, and I actually got it from Saint Louis Fed, that as long as you're if you're able to save and you're say a $100,100 grand in it or a million dollars in in S and P 500, your your account's gonna grow like crazy just because when the Federal Reserve prints up more money, your account's gonna grow just through through inflation. So I'm I'm a capitalist, and I'm just saying you have to be really cautionary. Know this is how it works. But the thing is but yeah. But first, you should have a $100 or couple $100 in a cash value life insurance or something like that first so you can really lever that.

And you and that's a better work worth than a four zero one k ever was. You know? Because a four zero one k too is almost like playing pinball with your hands tied behind your back. You know? You know?

So so I'm not again, see, once you have the money in the market, okay, you're gonna make a lot of money just by virtually being in the market, which is which is but yeah. It's it's it's a real parallel, and it's one of it was actually one of my IT guys who pointed this out to me, I researched it, and he I said, you're right. So as the money supply is printed up by the Federal Reserve, the s m the market goes up. It just automatically goes up, and it it they almost, like, it's parallel universe. So so the whole really key thing is really to say first, but what I'm saying but before you use you can put money in the market, have a have a couple a $100 or $200 or whatever in capital so you can take advantage of things.

Because when you have capital, then you can act. Otherwise, if you have to finance something, you have to react. The banks don't lend out really to small businesses anymore, which is which is horrific. But ever since 2,008, really, the banks do not really lend out to small business. They'll they'll lend out a big corporation, IBM, or something like that, but they really don't wanna help the little guy. So I think my whole message really, you have to be self reliant. Okay.

Yeah. Again, I mean, US I mean, the top, you know, top economy in the world. I think we're I think we're in the twenty fourth, twenty fifth saver in terms of savings rate. I think South Korea is, like, number 30 number one. We're, like, number 30%, but we're, like, number 26. So you have to really look at the fundamentals. You you have to ignore that. You can't follow the crowd. So a lot of the stuff which we were seeing before, you know, a lot of it's just propaganda. I mean Yeah.

So you have to be strong, but, yeah, you have to look about what's best for you first.