The Lucky Titan

7 Steps to Self-Banking With Mark Willis

August 23, 2021 Josh Tapp
The Lucky Titan
7 Steps to Self-Banking With Mark Willis
Show Notes Transcript

Mark Willis, CFP® is a man on a mission to help you think differently about your money, your economy and your future. 

Mark is a CERTIFIED FINANCIAL PLANNER™, a three-time #1 Best Selling Author and the owner of Lake Growth Financial Services, a financial firm in Chicago, Illinois. As co-host of the Not Your Average Financial Podcast™, he shares some of his strategies for investing in real estate, paying for college without going broke, and creating an income in retirement you will not outlive. Mark works with people who want to grow their wealth in ways that are safe and predictable, to become their own source of financing, and create tax-free income in retirement. 

Lake Growth Financial Services:
Not Your Average Financial Podcast:

Josh: What is up everybody, Josh Tapp here again and welcome back to the lucky Titan, today, we're here with Mark Willis and Mark and I just had a really good conversation about how we should intro him because this guy has such an awesome platform and how he works as an entrepreneur is so unique and I'm really excited to have him here because he's the founder of Lake Growth, which is all about being smart with your money and becoming your own banker and I have to read this phrase, because I thought it was so awesome so we're here to fire your banker and become your own source of financing, which that is totally going to be the title of this Mark so I'm excited for that but Mark, say what's up to everybody, and we'll hop in. 

Mark: Hey, everybody, and hey, Josh, thanks for having me on. 

Josh: Yeah, absolutely. Glad to have you here, Mark. So my first question for you really is about that that opening statement, right, how do we fire our banker and create new sources of financing for ourselves and I have to preface this by saying 99% of people who are listening to this show probably think the only way that they can get money for a new venture or maybe for hiring a new person or hiring a new agency is through getting a loan or getting an investor so kind of touch on what, what, you know, firing your bankers and becoming your own source of funding is all about?

Mark: Well, you're right, you're exactly right, most people would say, hey, it's either gonna come from a bank, or it's gonna come from outside investing, or I gotta save up my own little cash, my pennies, stack my pennies, and then blow it all, to see a gun right so I'd like to say that there's got to be a better way, you know, I think if we're always in the bankers pocket, there's gonna come a day where they're gonna win, you know, the tide will go out, the banks will take their profits, and we'll be left swimming naked so we've got to find a better way and banks are notoriously good, giving us money when we don't need it and then taking it away as soon as we do, you know, there's a quote by Mark Twain, he says, a banker is a fellow who will lend you his umbrella when the sun shines, but once it back as soon as it starts to rain, right, Isn't that the truth, and the average business owner is, is just riddled with debt,  I think the most recent statistic says that business owners are paying about 1/3 of their top line revenue to service debts 1/3 of your top line revenue to service debt and and many of our clients who we sit down with over zoom or over the phone, you know, we'll have a conversation with them, we'll do a high level overview of their situation and they'll they'll say, Hey, Mark, I'm feeling pretty good about my business, it's not really that bad, you know, hey, I've got this debt, I've got that debt, but it's all low interest, it's all low interest rates, you know, 4%, on this 3% on that, but we start totaling up the volume of interest and man, it, it shocks us, it regularly shocks the, the business owner, because hey, you know, they're spending a third of their money, vault by weight by volume and that's what kills us, it's just like, you know, it's just like food, you know, it's not so much the rate by which we eat our food that adjusts our waistline, it's the volume that counts so watch that volume and so banks are on one side of the ledger, investors are on the other side, but they both have the same requirement, control, control and I don't know about you, Josh but most of the entrepreneurs I speak with, they didn't get into their business, they didn't leave their day job to go work under the thumb of a banker or an investor, they they got into their own business to be their own boss. Now, here's the here's the secret sauce, here's the big surprise, we didn't just join one business, we didn't just start one practice or one business, we're actually in two businesses, we're in our business, whatever we sell our widgets or whatever and we're also in the banking business, we're already in the banking business all of us are, because either, you know, the bank is lending us money, or we're saving money at their bank, and they're loaning it out to the guy behind you in line so both ways, you're participating in the banking business, my call, my clarion call, my encouragement as a certified financial planner, is to find the smallest hinge in your financial life that can swing the biggest door and my belief is after looking at this now for over a decade, is banking, banking is really where you can make the biggest leverage point both as a person individual and as a business owner, if you can take back control of the banking function, literally, function like a banker for yourself, then all of a sudden, everything else becomes much easier, acquisition costs, capital expenses, inventory, taxes, but on the personal side to kids college, you know, your next car you need to buy, if it's all going to run through a bank, why not make it your own bank, rather than leave it at somebody else's bank?

Josh: Right, well, and I'm going to ask the question, Mark, because I'm sure this is on everybody's mind is okay, how do I borrow money for myself if I don't have money in the first place, right, where does this money actually come from, how are you able to take it and actually use it, like you said for acquisitions, maybe hiring a new person, remodeling your kitchen, which I wouldn't recommend I recommend reinvesting in your business but that's just me so how do they do it?

Mark: Well, you know, you're right, it does take money, I mean, think about it, if we're going to set up a bank, like the ones we know about down the street, whatever, it takes capital, they didn't just, you know, open their banks with an empty vault, they couldn't loan any of it out until there was money in the vault so you got to capitalize, you got to capitalize, now, the good news is to set up a banking structure like the ones we know about, you don't need the amount of money that banks need, you know, to be an FDIC insured bank, a literal bank, you need about 10 million 200 million bucks and you need a local bank charter, which generally takes about 10 plus years, plus, you know, a mountain of paperwork to get through and approval by all your, your other banks in the neighborhood that you're not going to encroach on their territory, I mean, this might take you 20 years to get through all that mess, just open up a single, single member, credit union, small little bank, but you don't need 10 million 100 million dollars to set up your own source of financing, all you need maybe is a couple 100 bucks a month to start socking away, the more you put away, the more you have, I mean, so again, don't be afraid to capitalize in your own bank because guys, you're already flowing some of you guys $500,000 a year to a million dollars a year is flowing through somebody else's bank, think of all the power that that institution takes off of your back, when you're throwing a million dollars plus into another checking account, they get to use that what do they do with that, Josh do they just leave it in the vault hoping you'll walk in and take a withdrawal,

Josh: I highly doubt it

Mark: they're putting that money to work, don't you know, you know, they're they're like they're loaning that sucker out as soon as you put the money in, they're borrowing or they're loaning it out to the guy behind you in line asking for a loan and what do they pay us in return, they give us 0.1 point, nothing percent interest, and then they loan it out to the guy behind you in line at 10% or 20%, or whatever the credit card was going out today so whose money was in the game there, did the bank have any skin there, no, no, they didn't. You know and so my thought my theory, my results now after doing this for over 1000 clients across the United States is Man, if you can control the banking function, where you live, and you're where you work, you'll win by default, because your competitors in your business, whether you sell widgets, or or cheesecake, or whatever you do in your business, your competitors are playing the average game, and I don't want you to be average, you know, I want you to be awesome so fire your banker become your own source of financing, it doesn't take a million bucks to do it.

Josh: So so let me ask you this, let's let's go a little bit more into the nitty gritty and kind of pick this apart a little bit because where's the money coming from right, so let's say I'm, I'm investing $300 a month into my own personal bank how do I then loan money back to myself, Is it, is it that original money or it can you loan yourself more than you initially put in?

Mark: Okay, yeah. So in the in the process, what we do is we have a one on one advisory consultation with folks, you know, I don't just jump to this conclusion that it even though I think it's a cool concept, it's not a good fit for everybody, it does take time and patience, patient capital, not not a not impatient capital, you know, I think, you know, if you're looking at a savings account, you know, you're not gonna have any ability to borrow against a savings account, necessarily, unless you, you know, get a line of credit from the bank and now you're back in the bankers pocket so you got to find the right tool and the tool that I found that most closely mimics what a real bank can do without you having to go set up a real actual bank is a little known variation on dividend paying whole life insurance of all things so, you know, for the folks that haven't turned us off, Josh, I'll explain what that means because there's a lot of bias around whole life insurance myself, you know, chief among them, I was very skeptical when I first read that this was a dividend paying whole life insurance of all things, you know, I had Dave Ramsey ringing in my ears but this is very different than the kind of whole life insurance that he likes to complain about so it is building massive cash value, relative to old fashioned life insurance, but there are still costs associated with setting up these policies so, you know, it might have eight to 40 times more cash than the old fashioned stuff that Dave Ramsey and Suze Orman love to hate about, but it does still have some costs, alright, it does take patience to overcome those costs. So you know, folks, sometimes they'll say, Hey, I can you know, my business mark, I got 10 grand a year, I'm able to shave off the top of my profits 10 grand a year, okay, well put it into a savings account, you'll have 10,000 bucks, a regular boring savings account, you'll up 10,000 bucks, if you put 10 grand into a whole life policy, designed the bank on yourself way which we'll talk some about why that's so important that it's designed the bank on yourself way but if it's designed correctly the bank on yourself way, you might have somewhere between sixty five hundreds and eighty five hundred bucks in the first year, wait a minute where the rest of that money go, I put in 10 grand, where's my money, all the expenses of life insurance are real, you know, even a true bank on yourself policy is going to have some expenses so folks don't do this, if you can't get past that initial cost, now, again, old fashioned life insurance might have $50 out of your 10 grand in cash value so we have now 65 to 8500 bucks, that's a pretty good swing in your favor and we cut the Commission's by about 60 to 80% but the point is, you know, we're looking at this as a long term place to park our capital, and your business isn't going anywhere, you know, God willing, you continue to see profits, and you continue to pack money somewhere, your money must live somewhere, it's either gonna live in somebody else's bank or yours so find a parking spot like one of these policies, because after the first year, the thing gets more efficient, every single year on a guaranteed basis, in fact, it grows at a faster rate guaranteed for the rest of your life without respect to the markets, or real estate, or having to rely on some generous bank to give you a, you know, a microscope for your interest rate that you get paid so it's a more increasingly efficient view, it's like a car that gets better gas mileage every single year, the longer you keep the thing, the more efficient it gets, first Year, you're going to see your expenses by about your three, four or five, you're gonna start seeing it grow faster, then you're contributing to it and beyond by your 10, by your 20 by your 50, however long you keep that policy, it just gets incredibly efficient, like a bonfire that just keeps getting bigger and bigger, until it can burn on its own without you having to keep adding that 10 grand a year but you love to because hey, where else are you going to put your money, where it's going to do that kind of yield so as far as like, where you find the money, I do that analysis with folks to see if there's inefficiencies in your current situation, I'll tell you a quick story and then I promise I'll hush had a meeting with a guy who he was just, you know, really didn't think he loved the concept of bank on yourself, but didn't think he could do it so we looked over his situation. Guess what he was, he was like way overpaying on his corporate mortgage on his business office space, which had like a 2% interest rate on it, he was way overpaying on some 0% interest credit cards that he didn't see, you know, reason why he was overpaying on that zero interest credit card debt, he also saw a need to to house his escrow for his property tax and so he put his all those things together and he was able to come up with almost 50 grand a year that he didn't think he even had and he put it all into a policy and he now uses that both for his property taxes every year, for his for his escrow and that sort of thing as well as he's able to pay off his debt with the policy, okay, so it's now his reserve fund to buy back his debt from his mortgage, and it's credit cards and it's a, you know, golden parachute for him at some point, this becomes an asset on the balance sheet of your business, for your business's needs but at any point you wish, you can sell the business or retire, take that policy with you as a source of money and now you've got yourself a nice stream of income for your retirement needs, as long as you might choose to take it out so that's, that's sort of the big picture of how we help folks reorganize their financial life to see if this is a good fit for them.

Josh: Yeah, well, and I would honestly say this is one of those next level strategies, right because I've heard about this a few different times from different guests, I've had them pick it apart and it's such an interesting concept because we really are typically thinking how can I pay somebody else or put my money into this fund, or put my money in this other place, with no expectation or no guarantee of result, it will never meet your expectations where something like this could be a way to work with yourself and not have to be constantly concerned about what other people are doing with more of a guaranteed return, which I love, I love in my opinion, what's one of the best ways to to take your money and then and then use it so so let me let me ask you this, because you know you're putting into these insurance policies and I'm just going to give some hypothetical numbers here and then you can correct them if we're wrong here so let's just say I'm putting $10,000 into a every year for five years into one of these policies, you know, that ends up being $50,000 after five years that I've put in, but then it's automatically being invested for me or what's happening as far as where's that money coming from to help it grow?

Mark: Well, I'll give you a TGIF nice, simple process here that folks can remember so TGIF one, you're putting money into a whole life insurance contract and the insurance company absorbs the risk of loss so you're not actually investing in stocks, bonds, mutual funds, that's all paper wealth in my opinion, you know, paper wealth, where you feel great when the markets up and you feel terrible when the market crashes, I saw my recent I got a Zillow report telling me what my home's worth yesterday, doesn't matter until somebody tries to buy it from you till someone writes that check that house is worthless, right, unless there's an ATM attached to your house, in which case, that's pretty cool house right but the key, the key here is this is guaranteed to grow. So let me start at the T, T is tax free, if we designed the policy correctly, it will grow tax free, under the tax law, both principle and gains can be accessed out of life insurance contracts totally tax free, as long as it's designed well and again, I keep saying that, because it's been designed poorly I've seen, you know, plenty of folks think they have one of these policies and it turns out, they don't, which we can talk more about but if it's designed properly, tax free to get the money out, that's pretty cool, second, it is guaranteed to grow for you and it can be used as a source of capital for your retirement where you have a locked in minimum guarantee of what your net worth is going to be this year, next year and every year thereafter, third, it is life insurance so we're covering that need to both for your family and that's huge but also if you got a business partner, let me just say this, I've met people where they had a business partner who passed away, unfortunately, and all of a sudden, guess what the wife or the spouse or the kids or the you know, long lost uncle comes out of the woodwork and all of a sudden they show up to work in your business the next Monday, telling you how to run your business because now they're an equity partner in your business, whoops, whoops so we need a buy sell agreement with life insurance, to buy off the surviving spouse or kids or whatever so you get to run your business, if you're if you're if your partner should pass away so that's important to not just on a family level, but on a business level, that's eyes insurance, and then TGIF is financing, your need for financing guys is much greater than your need for insurance, your need for financing is much greater than your need for insurance so I squeezed down the insurance amount and our advisors that our firm we squeeze down that insurance amount, so that we can pump as much of your money as possible into the financing part the cash value of the life insurance, that's what you can borrow against, like a bank and when you borrow against it, and this is huge again, if it's designed correctly, if you have 100 grand, let's say in cash value, and you borrow out, let's say $30,000, to invest in some really cool podcast equipment, or to grow your business or to do some marketing, in your business, whatever your needs are, right? You borrow out 30 grand, you had 100 in there, and you borrow out 30 that year, your policy and every year your loan is outstanding, the policy will grow on the full cash value, even what you borrowed out on the full 100 on the full $100,000 as if you hadn't touched a dime of the money to me this is the ultimate solution against the sinister disaster of breaking compound growth, you know, Charlie Munger, the guy business partner with Warren Buffett, he says the most important rule on financing is to never break up compound growth, never break compound growth and we keep doing that every time we spend out of our brokerage out of our savings accounts, basically anywhere else in the financial universe, wvery time we pay cash for things, we're breaking that compound growth but if we have a uninterrupted system that grows on a guaranteed basis, nice conservative, you know, middle single digit returns, nothing sexy but if it continuously grows on a compound basis, and it grows, even if we use the money, I mean, didn't we just solve the greatest problem in financial planning, you know, breaking compound growth over and over again, I mean, that's pretty awesome and and hey, you know, if nothing else, it's a cool acronym TGIF.

Josh: Right, at least you'll remember it right, that's important. 

Mark: Yeah. 

Josh: That's right and I know this is awesome, because it's kind of an ideal situation for most entrepreneurs and and I would honestly, I would recommend for everybody to at least go check this sort of thing out, right, say, how can I leverage this because odds are, if you're listening to this, you've got at least one credit card that's sitting at 20% or something and you're saying, Man, I'm so sick of paying this payment, right so I'm Mark, where can people connect with you first off?

Mark: Yeah, well, you know, when you're right, I used these policies to wipe out my student loans, we've used it to help our business grow, we've used it to invest in real estate so you're right, the sky's the limit on how you put this to work, folks want to find out more about this, if you love podcasts, check out ours too, it's not your average financial podcast and you guys can go to if you want to sign up and get on my calendar to meet with me for 15 minutes and to see if this makes sense for you or answers your questions, you can go to that's so quick, as quick boy.

Josh: Perfect so make sure you go check that out everybody and then Mark, just to wrap this up with one little bow, can you give us one final parting piece of guidance for our audience?

Mark: Well, I've mentioned a few times you guys saying these things correctly, I've seen a lot of folks who thought they had one of these policies kind of like when you get your, your food at the grocery store, it says all natural on it. There's a lot of other names out there for this, infinite this and private banking that and you know, we can go on and on, it is not a regulated term. Okay so you really want to make sure you're working with a credential professional and the only credential I know of in this space is the bank on yourself professionals credential program, it took me three years to get through that process to be really proficient at doing this so me and our advisors at our firm, we're one of 200 advisors around the country and Canada that I know that do this so we'll look for bank on yourself as a, you know, kind of a status symbol or a quality standard, kind of like USDA Organic labels on food, you know that that food went through a number of hoops to get that, I'd say that's our parting piece of wisdom is to look for that as a kind of a quality control in the marketplace today.