Episode 163: It's All About The Income with Michael Lynch

So the big question is this: how do small business owners like us grow our leadership, develop our teams, and scale our business in a way that allows us to get our products and services out to the world yet still remain profitable? That is the question, and this podcast will give you the answers. I'm Bradley Hamner, and this is the Club Capital Leadership Podcast. Hey, before we get into today's episode, did you know that Club Capital is the largest accounting and advisory firm for insurance agency owners in the country, providing monthly accounting, CFO services, and tax preparation. Check them out at club.capital.

Welcome to another episode of the Club Capital Leadership Podcast. My name is Bradley Hamner, your host. On today's episode, we have Michael Lynch. He is a certified financial planner with nearly 20 years of experience working with American families to craft plans to fund their dreams, educate their children, and finance their retirement. He was actually an on-site financial planner at ESPN, which I should have asked him about in this podcast. He's contributed to The Wall Street Journal, The Street's Daily Retirement, and Investor's Business Daily, and he's even hosted Smart Money radio show for over a decade. He's got a fantastic energy. I think you're going to learn a lot about personal finance, even if you're an advisor yourself. You can oftentimes begin to focus only on your clients and not on your money. He's got a fantastic book that I think you're all going to want to check out. It's called All About the Income: A Simple System. So make sure you're going to make sure to go to and check out his website, which is simpleandbig.com. Without further ado, here's my conversation with Michael Lynch.

Have you ever tried online marketing before and weren't sure if it was working? Maybe your rep talked about all the impressive features and stats and said things were going great, but you didn't know how all that tied into raw new policies written. Well, that's not the case with DirectClicks. DirectClicks is the premier Google Ads and SEO option exclusively for State Farm agents.

Why?

They're 100% results-oriented with an exclusivity guarantee. Every review call you have with your account manager focuses on what really matters to your business, and that's leads and call-ins received. Everything will get broken down to cost per lead received. By investing with DirectClicks, you're going to free up time and energy to focus on what's most important in your agency and doing what it is you do best. This will be the best investment you make for your team by spending confidently and scaling your agency today with exclusive online marketing partner DirectClicks. Visit us at directclicksinc.com. Ambition is the first step towards success. It's time to level up your agency, and Coach P Consulting will help you do just that by using the same strategies he used to sell over 700 life insurance policies in 2021 alone. No, this is not your regular one-and-done type coaching. You'll get personalized coaching 2 days a week, every week of the month, and you'll get a live look behind the scenes of his team training and an office that's performing at the highest level. There's a reason Coach P Consulting is the fastest growing coaching company for insurance agency owners in the country. Coach P will train your team alongside his own and show you the exact steps they are taking to achieve Chairman's Circle, Exotic Travel, and Multi-Line Presence Club and be one of the few agents to be selected to have a third office. So whether your goal is to be at the top of your local market or amongst the best in the country, this training will give you the strategies and the tactics to get there. For just $250 a month, you'll get high-level coaching each week from someone who is already getting it done at that level, and his strategies work, and it's time to put them to work for you. Sign up at coachpeakconsulting.com and get your first full month for free when you mention the Club Capital Leadership Podcast.

Michael Lynch, welcome to the Club Capital Leadership Podcast.

Well, it's great to be here. Great to be here, Bradley.

Excited to have you. So we always start with background and origin story. We love hearing people's journeys of kind of how they got to where they are. So why don't you just tell people a little bit about your backstory and how you got to where you are in life?

All right. Well, you know, it's a long story, right? But we'll keep it short. Right out of college, I went to work for a free market think tank, and that's where I learned to write and really speak and communicate. And from there I went into writing for a while. I was an opinion writer and a feature writer and covered DC for an LA magazine, and that was fantastic. And then my early 30s, I always loved doing personal finance. I love, I love it. I love the dorkiness of it. Like, oh, you can do a Roth, or I covered the Roth IRA when it came, you know, all the bills when it came through Congress. And, and I used to write in the first dot-com boom. I wrote for, uh, I wrote a personal finance column online, like early online stuff was kind of fun. And so anyway, when I jumped, uh, uh, jumped at the opportunity opportunity for a career change. And it was dumb luck because just as the media was imploding, or just prior to it imploding really, uh, I, I career changed and I got into personal financial planning. And, uh, it's been fantastic. And so that was 2000, I think, of my licenses. So probably they don't lie, but I think they're probably 2003. So we're in the 20th year here in this game.

Yeah, yeah. I'm curious You obviously will talk about your book in just a little bit, but you've been a writer. Now you're— now you have taken the writing aspect of what you were doing, combined it with obviously the financial knowledge and becoming a financial planner, certified financial planner. Did you ever have any thoughts, or when did you first have the thoughts that I think I'm actually going to write a book about the things that I know around personal finance?

That's an interesting question. My first book is called Keep It Simple, Make It Big, and I wrote that book like my second year in the business, but I didn't publish it. And here's what happened. We had these presentations we give at corporations. I'm blessed. A great way to build a business. I was on site at ESPN. I'm at Madison Square Garden right now. Big hospital systems, utility, where we go in and we teach soup-to-nuts financial planning, 4 parts, 8 hours. Can't fake it. Not that scripted. And we had a presentation that we had purchased. It was Financial Strategies for Successful Retirement. Very good presentation. However, ING bought it and bought the rights to it. We knew we were going to lose it. So since I had the skills, I went and I wrote a new presentation. I got the graphics about the graphs. My company that was my back office, in which I don't name names, but it doesn't matter. I don't have any— I have a lot of love for them. Snoopy. They basically said if they approved it, they owned it. Right. And I'm like, well, you're not going to own my intellectual capital. I mean, that's just a line too far across. It's not going to happen. So I put that on the shelf and I just basically put it in my drawer and I was like rummaging through my office like 9 years later and I pulled it out. I'm like, this is good. Now it was, it was built for presentation. So I had to write it all, seeing all the inflation, all the numbers updated was very interesting. And then, you know, and then building narrative around it. So I started writing early. It was always part of my business plan. But what I think it is, and you have this as well because you got this successful podcast, communication skills, they are the most highly paid skills in America, probably the world, but I only know America, except if you're directly paid to communicate. Right. Think about that one. They're the highest paid skills unless it's your job. So if you can write and you can speak, you can articulate, you can motivate, you know, you can combine that with a whole host of technical skills and you will get hired quicker, make more money, be more successful than somebody only with the technical skills. On the other hand, if you're paid to write for a local newspaper, I hope the food bank is on your route because you're going to need to pick up a free meal, right? So that ain't a good way to make a living.

Yeah, very true. Very true. Who influenced you the most regarding your financial knowledge around personal financial— personal finances?

Ah, well, we can do a lot. So I was blessed as a young— my boss and my mentor, wonderful woman, name is Sally Pipes. Her mentor was Milton Friedman.

Oh, wow.

Wow.

Yes. And so I can't say that he spent a lot of time with me, but I can say I spent time with him early in my career. And I can't say that through her and him. Definitely. When I read Capitalism, Freedom in College and I was at a very liberal college, UC Santa Cruz, Marxist, when I read that, it changed my life. I'm like, this is how the world works. This dude's right. This is right. Okay, so that's a broad level. Now, when we look at actual the field, you know, investment guy, I've got a master's in economics. So, you know, I like stocks. I'm a free market type of guy. Even these peers like this, I understand them. I don't have to like love them, but, you know, they're not like, how could this happen? Nick Murray. I read everything Nick Murray wrote before I got into business. Before I got into business, everything Nick Murray wrote.

Yeah.

NAFA. I always loved NAFA, so I read Advisor Today, subscribed to that before I just rejoined too. So I was one of their 440 years ago and You know the guy, uh, Bill Bakarach, fantastic. I, I read the trades, I read the trades. And so, um, just, there's just a lot of good information out there. I mean, Ed Slott, I'm an Ed Slott advisor. We're the dorks, right? We're the heavy dorks. We go for like 2 days, spend a lot of money to like read about how IRAs get played out in court. I mean, it's— so anyway, I, I like to read. I read about a book a week. I consume a lot of— we used to call it material, now we call it media, right? Or a lot of content. I'm a heavy consumer of content.

Awesome.

Ed actually came on the podcast last year when we talked about his book, The New Retirement Savings Time Bomb, or something like that. I may have that a little bit wrong, but he came on. Nick Murray, I love his humor, or I love his dryness. I've never met him. I've read a couple of his books. I know a lot of our listeners will be— familiar with, with Nick and some of his work. For those that don't know, when we talked about Milton Friedman, can you just tell people who that is so that they have an understanding if they don't know that?

Milton Friedman is very germane right now. Milton Friedman was a Nobel laureate economist from— that he won, I think, in the late '70s, early '80s. And what he won it for was his work on monetary theory, which said the problem with inflation is always money. And also the cause of the Great Depression was the fact that the Federal Reserve didn't stand in as the lender of last resort. And so basically what happened was the money came out of the economy and everything collapsed. And that's why you had deflation. He said the Fed would have put the money in the window. Now, I don't read his technical stuff, so I'm paraphrasing here and I could be wrong because I'm not smart enough for that. But nonetheless, so, you know, President— our current president, his name— well, Joe— President Joseph Biden from Scranton. He actually said Milton Friedman is not in charge anymore early, early on in his, uh, in his presidency. And in fact, he is, because what you see happening right now with Powell, uh, uh, is he is channeling the Milton Friedman, the monetary policy, the idea that you cannot have inflation without money. It is both a necessary and it's a sufficient condition to get it. Too much money chasing too few goods. You're in trouble. And so he would have no hard— he would not have a hard time understanding what's going on right now. He— and he was a fantastic communicator. I think about him, he wrote this very popular column in Newsweek, and it was— he was on the free market side, and then Paul Samuelson, who's classical, was on the— and they would debate the topics. And so he was really out there. He was a great communicator, uh, of, of ideas, and he was, he was just a wonderful man. He was only about 5 feet tall. He made me— he made me— he made me look tall. I remember when I met him, I brought this ratty old book, Kabbalah and Freedom, and I had him sign it. And my, my boss Sally was a little bit embarrassed. I said, no, I love this book. That's why it's ratty. You know, let's sign this one. Sign this one.

So I realize that I'm going to ask a question that is difficult probably to answer, but I think that you are so well-read in this space. People want to know. I'm curious too. We're recording this very beginning of November 2022. And so the last 6 months have been a wild ride and it looks like the next 6 months certainly could be a wild ride. Where have we been briefly? Okay, so again, take us back just a little bit. Um, your— how we got to kind of where we are the last, uh, couple years maybe. And then more so, where do you see things going over the next year? So I'm asking a macroeconomic question. Okay, I'm asking you to pull out your crystal ball. But then boil that down to what are you seeing, the philosophical, um, approach that you're taking with some of your clients right now in this environment.

This podcast is brought to you by Autopilot Recruiting. Join over 1,200 State Farm agents in putting your recruiting on autopilot. Any successful insurance agent will tell you how important team is. Finding those rockstar team members doesn't happen when left to chance. It happens through consistent recruiting. You never know when you're going to lose a team member, and the key to an incredible team is constantly searching for the best talent. Autopilot Recruiting is a continuous recruiting service where you'll be assigned a recruiter that has been trained to recruit on your behalf every business day. This recruiter will take over and revamp your career plug, send out assessments, do prescreen phone interviews, and schedule your in-office interviews. All you need to do is to show up and give a thumbs up or a thumbs down. This ongoing service is extremely affordable and a no-brainer for taking your insurance agency to the next level. Listeners of the Club Capital Leadership Podcast, go to autopilotrecruiting.com and use the code Club Capital to get started. Again, autopilotrecruiting.com and use the code Club Capital to get started.

Yeah, it's like I think Yogi Bear said, he doesn't make predictions, especially about the future.

Yeah.

And for people that are interested in future predictions and and this would be good for you too, Brad. I will answer your question. Is, uh, this, this book by this guy, I think his name is Daniel Gardner. It's called Future Babble. Future Babble. It is an absolutely fantastic look at predictions, who makes them, who we listen to, and who's actually less wrong, because nobody's ever right. And he starts out talking about oil. Nobody can predict oil. And when the CEOs of oil companies actually admit, they're like, and we can't predict it, but we pretend to be able to because what the heck else are you gonna do, right? So I think what we have happening now to answer your question, is basically we've gone through a period— go all the way back to, uh, the dot-com bust and 9/11, where the Federal Reserve started really actively using interest rate cuts. Yeah, to juice the economy. And they knocked them down low, they kept them low. That was after 9/11. Yeah, right. And before that, we had short-term rates. I don't know how old you are, I'm 53. I remember the Great Inflation, and I remember Jimmy Carter I remember Ronald Reagan. So I remember that. I remember those high prices. And then Paul Volcker raised interest rates very, very high. And if you talk to somebody old enough, they'll tell you about a 20% mortgage. It's about 18% more. Yeah, right. We give our classes, we always have a contest who we take two things, you know, what's the highest mortgage you paid, highest CD you got? And they're always double digits. I remember I got a 10% CD in high school. And then also, who here paid more for your last car than your first house? Hmm. And so that gets both at interest rates and inflation and what it does and what it is. And so we have this period of price stability that came out. Volcker really putting us in that recession with high interest rates. And so we're coming up in the '90s and, you know, we're managing money before the collapse that happened with the the dot-com, you could get 5%, 6% at the bank. So you could take money out of the stock market, put it on the side, and actually get paid, right? You get paid. And we had a good economy. We had a balanced budget. Bill Clinton, we had an entertaining president, right? So the whole, you know, the world was in a bad place. Companies were making money. They increased taxes. Folger was going to crash everything. Of course it didn't, right? It's, you know, predictions are tough. But then that came, they cut the rates, held it down. We had the housing bubble. Was the housing bubble built on— it was built on too low rates, right? People need to stretch. They started lending money out to get higher rates. People that probably shouldn't have been borrowing money, like they didn't have a job because they couldn't pay it back. There's an idea. And so when that collapse happened, cut them again, sort of. And for whatever reason, they kept them low. All the way through and just started increasing them again during the Trump presidency because that's when the labor market started to tighten and the working people in this country started actually getting their wages to go up. It's good, right? That's good. Finally, like the top flattened out, those came up. This is a really good paper by Michael Strain on this, the National Bureau of Economic Research. And that came up. Then we had COVID. Early on, COVID was a market issue. So the Treasury market was creaking. There's a lack of liquidity. So they stepped— the Fed steps in there. But then also they just cut rates and they said they're going to keep them low. They said they weren't going to raise them until 2023, I think. And this inflation just crashed them. And on top of that, you had Federal Reserve policy also putting money in the system by buying bonds. When they buy bonds, they take a bond in, they put cash in. So you had like double that. And then with COVID what you did is you put on a lot of, um, a lot of fiscal policy as well. So The, the Congress, you may have noticed, and the president, both bipartisan— Trump and then continued on to our current administration— passed out a lot of money. And so you take supply and shut it down, you take cash and you give people cash, put it directly in their bank accounts in addition to the wages and bonuses they were already getting. And when that money comes out, you're going to get inflation, and that's That's what we got. And, you know, the mainstream press, well, nobody predicted it. Well, no, they did. It was predicted by plenty, plenty of people. Like, it's just not the people that they chose to interview. I was— I scratched my head on a few Wall Street— I have a file on my desktop called Bubble Up. And so I've been tracking all the inflation writing for a couple of years. And it's crazy. In The Wall Street Journal, they wouldn't even interview like one monitor to say, hey, it's money. No, it's like it's—

it's—

they always say, what's demand? What did demand come from? Demand comes from money. So that's kind of what I think. Where are we going? I'm an optimist. So again, look, don't take any action on what I say. The last thing I want you ever to do is go make a move based on what this guy says to a group of people. However, I tend to think that problems in markets create solutions. So the problem is low prices. Solutions, low price. There's a price at which you buy your neighbor's house and there's a price at which you should sell your house to your neighbor. Right. And if we go extreme, you can think that through. I'm not scared of higher interest rates. I think money is a good thing. So I think money should— if you use my money, you should pay me. That's called interest, including Uncle Sam. And so in my happy scenarios, and I wrote a blog post on this, imagine a world in which you go to the bank, you get 5%, and right, in which you can buy a government bond and get 6, 7, and in which you could stock, you can stretch and put your money at risk. Get a 3% dividend and hope for like a 7% return, right? Well, you have a whole set of choices. That could be a world we're going back to. And one other thing that I know is near and dear to you and your listeners is who's one— what's one industry that higher interest rates are very good for? Which is to say, who low interest rates have been terribly destructive for?

Yeah, life insurance.

Life insurance, the insurance industry, the retirement product industry, right? The main ingredient that everything gets manufactured out of especially stable products that clients want, products that don't swing 20%, interest rates are the main ingredient. And we have seen an immediate improvement across the board in those types of offerings for people. So it's not necessarily all bad, right? Every negative has a positive, every positive has a negative.

[Speaker:STEVE] Yeah, I think it's really well said. I mean, because for so long we have all enjoyed the 2% and 3% mortgage rates but it's also come with other investment products. It's been really— you just don't have any options, you know, CDs paying point-nothing percent as an example, let alone other things such as inside life insurance policies. I totally agree with you. Ultimately, the dam had to break at some point, right? I mean, it had been there for just for so long. So, let's tilt over a little bit into more personal finance then and continue that on. What do you think? Why do you think so many people in general just avoid thinking about planning for retirement?

Um, well, you know, I think we have different personalities. Okay, so the, the, the, the group of people that I see range from late planners to avid planners. Okay. So I, in a lot of my writings, I actively challenge the notion that there's a retirement crisis. I don't believe there is. And I think actually if you go— fellow American Enterprise Institute, I can't remember, I'm going to lose his name right now. I'll remember later and I'll cite it out. He's, he's so good when he debates on this. He was the commissioner on Social Security. And if you look at the actual numbers, people retire, retire in America quite well and they enjoy a high standard of living and they're very happy. So for example, Bradley, 50-year-olds worry about their retirement, but when you track those 50-year-olds, when they're 70, they're like, it's great, right? They worried, maybe they saved more because they were worried and they ended up okay. Now there is still a lot of pensions out there and we'll have to see when those pensions run off. If our generation does the same. But in general, I think people have a hard time with time perspective. You know, they just have a hard time with time perspective. What we have to do— the great thing about the internet is when we were kids— I keep telling you how old I am. How old are you, Brad?

41.

Okay, so we're kind of same generation. You probably heard this: the problem is education, we just need more information now.

Yeah, that's right.

It's not true. That is the dumbest thing ever. There is not one problem in society that happens because people don't have information.

Oh, let's see. We've got obese information.

Exactly. We don't either. We don't want to make the behavioral change.

Yes, yes.

The reason why I got a belly isn't because I don't know what I need to do to get rid of my belly. It's because when it comes down to it, I don't want to make the behavioral change. Yes. And it's always a trade-off of the present you versus the future you. And some people discount the future radically. They live their cash and carry. They don't care. Right. Like, and other people, the future is so important to them that they'll actually starve themselves today so that they can maybe have a meal when they're 95. And there's a lot of people in the middle. So I actually love the US retirement system. I love the US social safety net system. I think it's diverse. It offers people help where they need it, gives them a lot of options. Thomasin over here, oh, people don't have access to retirement plan. Really? Ever hear of an IRA? Right. Everybody has access to retirement plan.

Are you an agency owner looking to grow your revenue, increase your bottom line, and better manage your taxes? Club Capital is here to help. Club Capital is the largest accounting and advisory firm for insurance agents in the country, providing monthly accounting, tax strategy, and CFO services. Way more than bookkeeping and your everyday run-of-the-mill tax prep, Club Capital is focused on providing financial and tax advisory services that help you plan and forecast your agency's performance. Their financial dashboards and agency forecasting tools help you better understand your agency's historical performance, create and measure future targets, and see how your agency compares to your peers around the country. Imagine what it would be like to understand the impact to your bottom line when deciding to hire a new employee. Or forecast the impact rate changes or commission rates will have on your business. With over $200 million in tracked annual revenue and $140 million in tracked annual expenses, Club Capital has the data and the team to help you make better informed decisions for your agency. They will help you turn that back office stress into the backbone of your agency's success by giving you the tools to take your agency and your leadership to the next level. Visit club.capital today to book a solution overview with one of our business consultants. Club Capital, way more than a CPA firm.

Where, uh, I love when I was actually talking to somebody, a business owner this morning, and we were laying out, we were looking at his what I call school board basically for his business. And then we were looking at the numbers for this year. Actually, we went back 5 years to look at the numbers from his business and then brought that to present day. We began to kind of rewrite the story that was in his head because there were some things that opened up that he didn't even realize because he had not been measuring some of the numbers. Riz, I'm getting to a question here around planning because when we started to lay out what his targets were in the business for his business, that was not a substitute for the plan to make that happen. So with retirement planning specifically, somebody could sit down and begin to say, okay, well, how much do I need to have? I think there was some ad on TV at one point that was, you know, what is your number? Do you have a number? It's $1 million, $2 million, $10 million, whatever that is. Okay, well then what's the plan to make that happen? And how do I go about the behavioral change, which Nick Murray obviously talks a lot about behavioral change.

Yeah.

What's the behavioral change that I need to have in order to make that happen? So when is the right time and what are some of the biggest pitfalls that you see whenever people go to actually put a plan together?

I think it's actually not taking the time just to do basic math. I mean, I think math is really hard for us, and I say that myself. I'm not— and I think exponential math or compounding math is impossible. We're linear thinkers. So I think we overestimate what we can get done in a short period of time and underestimate what we can get done in a long period of time. All right. And so for the older generation, I think what happens, Bradley, is we're all living life. We're all living a lot, even though our parents allegedly live better than us. That's a lie. We live better than them. If you look at what we consume and how much we consume, right? And Americans consume way more than anybody else. Look at our per capita GDP in America. And look at Europe and you'll be shocked. You'll be shocked. I was looking at the UK, different numbers on this. I saw this written in the Wall Street Journal and then I went to try to verify. It's pretty close. If the UK was an American state, it would fall between— it'd be just above Mississippi per capita. It'd be the 50th, right? The UK. All right. Well, we live so well here, right? We live so well. And so I guess what the point I was going to make is we have a hard time understanding that and then understand what it's going to take to create that. But it doesn't take that much if you start early enough. My next book is going to be Go in the Forties and Fifties. And like to say, if you save 10%, you'll never be poor. And if you save 20%, you'll always be wealthy. And I actually believe— and I got some numbers to this and we'll go that for a lot of people that have the ability to delay gratification and save for themselves, a 401(k) type of plan is way better than a pension ever is. Gives you more money and lets you pass wealth on to your kids and your grandkids. But it's self-serve. And if you don't elect to do it, you're going to get different outcomes. If we're in a government-controlled system, You and I pay the tax, we get the same benefit, right? But if we're in a private system, you make different choices. You're thinner than me. You're making different health choices than I am. Unfortunately, I don't get to make my choices and look like you, right? I wish I could, but I don't. And so you get disparate outcomes because of that. And now I could go on and on and on. I love the American system. And what I will tell you also, is I'm, I'm not going to say I'm unique, but what I will say is I have a very large financial planning practice. I get to know my clients very well. I've worked with, I've worked with young people, I work with old people, I work with clients that make $3 million a year, I work with clients that make $30,000 a year. I see the social service system. I can have clients where I, in the markets in which I work, where they can have $1 million and they get free Medicare. Because Medicare is income-based, not asset-based, right? So I know that there's so many different strategies at different levels of affluence and different levels of wealth. And ironically, this is a good problem to have, and I would take this problem, and I do take this problem, but it's harder for people that are affluent to get wealthy, to retire well, than it is for people that are not affluent. And by affluence is high income. Wealth is a lot of assets. That's the difference, right? That's the difference. Why do I say that? Well, because affluent, you think you make X, but you really make X minus your taxes.

Yes.

So taxes take a picture. Then, you know, if you're a professional, you have all kinds of spending expectations on you. Yeah. I think the difference between a plumber and a surgeon— I mean, that's— I'd be a plumber every time. Every time I people every time. Okay, then, then what you also have is Social Security. I love Social Security. 15% of our income already goes to a pension, and Social Security at 13%, right? It already goes there. And Social Security is fantastic, inflation adjusted back by the US government. But if I'm, if I'm a lower income, it might replace 50, 60% of my income at zero tax. And if I'm higher income, so that means I, I almost don't have to have much savings at all. And if I'm a— and the reason why— and I've been living on that my life, my life the whole time. So somebody that makes a lot of money might not want to go and live there, but life's worked very well there, right? I mean, people, we're all different. So anyways, I think that there's ways to make it happen, to make it happen for, for everybody. And then the thing that gets missed in it when, when they, when they There's a great book out there by Phil Graham right now, and then a couple of other researchers. And what they really are is critical of the government data, as they should be, because they basically say the way the Census Bureau tracks data is for people that earn money, they count your taxes like you get to spend it. But last time I checked, I didn't get to spend my income tax, right? So let's say I make $200,000 and I have $40,000 in tax, 20%. I'm really making $160, right? I'm making $2,000. Then if you're at the bottom end, they don't count government benefits as income. Hmm. So, so you get $2,000 a month in rent, right? And so my market, that's what it would cost, right? Or whatever. $100,000. No, no, that's counted, right? Same thing they do with the retirees. When they ask retirees how much they spend, they underestimate it by like 20%. The IRS records don't lie because they have to report on their taxes. But it's just survey stuff, right? So I ask you what your income is. You forget about the withdrawal you took out of your IRA. That doesn't seem like income to you, right? You just think about your Social Security. So anyways, I think there's a lot of diversity. I think it's a lot better than people think. I think our system is actually— is fantastic. It is self-serve. I think that's, you know, and I think that's why it provides opportunity for us to add a lot of value to clients up and down the— up up and down the income and asset spectrum. We can add a lot of value by using our brains and using our brains and our knowledge to help them out.

I feel like that whenever you were talking about that, it made me think of— I don't know who said this before to me, but lifestyle creep. So if you were making $50,000 and you were comfortable there, then you start making $100,000. And then for some of you, you're making $250,000, $500,000, even $1,000,000. Your lifestyle has just gone up and you're accustomed to that living now that you have it and you're not saving as much. I mean, I don't know if you agree with that, but that's, that's kind of what I hear is that if you're, if you're not able to balance a budget at $30,000, when you get to $300,000, it's probably going to be the exact same thing because you're just, your lifestyle is going to creep up accordingly.

Correct. As the radio show co-host used to say, The leading cause of bankruptcy is a lower than expected raise.

Yeah, right.

All right. You spent our bonus, right? I, I hear you on that. I hear you on that. On the other hand, what we say is just drive a wedge, right? Parkinson's law. But, you know, drive a wedge. So you get a raise immediately, save more. You got to drive away from your income expenses. You need to save that money. And, you know, again, I'm talking wide range of incomes, wide range of assets. We can be happy at different levels. There's just different strategies that are necessitated at different levels. I recently had a doctor, a really high earner, and he was short for retirement. And the reason he was short was because he was using middle-class advice, which is max out your employer plan. But if you're making the kind of money he was making, an employer plan doesn't give you what you need.

Yeah, yeah, it's a good start.

but you better stack it up. Also, what I mentioned before about Social Security, it's going to replace very little. So whereas if I am an average earner, 10% will get it done because Social Security gets me there if I have a long enough time horizon, right? Whereas on a higher earner like that, he needs 20%, right?

The best use of money is to buy back your time, and one of the best ways to do that is with a virtual assistant. Rock Solid Virtual Assistants brings together top business leaders with exceptional virtual assistants to build successful relationship-driven teams. The services they provide range from graphic design and marketing to executive admin assistance and everything in between. There are many virtual assistant companies on the market to choose from, but at Rock Solid, their processes and passion for what they do place them at the very top of that list. Not only is their hiring process exceptional, which nets them the very best assistants, but they also provide superior support to their teams for the duration of your time with them. The matching process at Rock Solid is unlike any other, and they have the track record to prove it. Their hands-on approach has proven to increase the success rate of their teams exponentially. So if you're looking to build a rock-solid team for your business, reach out to Tracy and the team for a no-pressure discovery call at rocksolidassistants.com. They value your success as if it were their own.

Because it is because you have to have a bigger portion replace a bigger portion. So you got to, you got to have the right, the right tool for the job. You know, you got to have the, you got to have the right, the right, you know, game plan given your personal circumstances.

No, I think it's good. I mean, I think it's, it's, it's paying attention to who you pay attention to and who you take advice from. Because if you're, even if in business you're listening to someone who is you know, 20 times your size, talking about what it is that they're doing to be able to grow their business that may not be applicable to you. I mean, an extreme example, a good opportunity for Warren Buffett is not a good opportunity for Bradley Handler, right? I mean, it's just, just not right.

You might appreciate this because we've been in the similar industry, insurance industry and stuff. And so you'd go to the annual, you know, the meetings and they're very good. You get it. You learn a lot of these meetings and you see stuff, but That would be a critique. You got the, you got the, you got new person in the business. I was actually that person, so I was on plenty of stages. But what they say is, oh, look, you know, all this, everything this person did, right? And then it's like, it turns out his uncle was a CPA, gave him all the business. Just totally not replicable, right? Your uncle's not a CPA. The best question I ever had. You ever see that movie The Million Dollar Baby? Yes.

Yes.

That guy spoke to our firm and he was great. And one of the people in our firm got up and asked questions, said, Well, I'm going to work with athletes. What's your best way to get in this market? And here was his story. It was great. He's like, I don't really think I can help you there. He's like, he's like, why? Well, let me tell you how I got in. So I went to business school in the Midwest. It was, I think it's Cincinnati, Ohio, somewhere. And I got an MBA and I was working at marketing soap at Procter Gamble or something like that, right? Yeah, good job. But it was— and he's like, I had this business professor call up. And he's like, look, there's this new trading card company. They need somebody. I think you'd be great for the job. Why don't you go apply? So he got that job. So now he's working in a card— I'm not a sports guy, so you might— if you're a sports— people would know what card company is. I'm not. So you just— I don't. But I know the story. So then he says, so he's like, I got to know the players. And Emmitt Smith is like, you're smart. My agent's dumb. You're smarter than my agent. You should be my agent. That's how I became agent. Then Evan Smith is what's known as a multiplier. Or maybe like everybody likes him, they ask him questions. So who's your agent? So he's like, I became known as the best agent for the running backs. He's like that. So go try to replicate that. That's not replicable, right? Like, yeah. And he wasn't bragging. That's just how life works, isn't it? Isn't that just how life works? It's just how it works. You get in motion and you get in motion. It's a corridor theory of success. Start moving. You don't know what's going to come your way. That's why I don't believe in niche markets for most people, because you do that in theory and it doesn't work. Go and practice and see what happens. And maybe stay a generalist because you like all kinds of people, you know.

So I'm curious, I want to ask you one question around your book. It's All About the Income: A Simple System for a Big Retirement. That's a great title, by the way.

Thank you.

Credit on that. You talk about this idea of the carbon monoxide of retirement. So what would be, what is that, number one? And whenever we're talking about inflation, but so I want to ask you around that. So what is your advice for, you know, who is someone who is currently setting up and the process setting up their financial future?

So the carbon monoxide is inflation. It's negative compounding. Even at 3% of pension, a dollar in a pension becomes $0.50 over 20 years, right? The pension gets cut in half. All right. So the thing is, there's no such thing as safety. Now, it sounds crazy right now because what are you talking about, Lynch? Stocks are down, bonds are down. The best thing ever is the bank. That's right. But it's going to lose a little bit every year. And that when that creeps up, you're in trouble. So what I say is we define— it's strange— we define wealth as how much assets we have, which is logical. However, we live on the income, right? Income is what drives our life. And so what we need is inflation-adjusted income. We need 3 things. First, we need to have stability of principal. We need to be able to get a dollar when we need a dollar. And right now We can see that we don't want to really sell much financial assets to generate income right now. The second thing we need to do is we want reliable income. We need our income to come in constantly. We can't be like business owners or rock stars or, you know, celebrities that get a big payday and then don't work for a while. That's not how most of us work, right? And then a final thing is we need growth of income Over time, over time, because otherwise we're going backwards. So that's the system, and everybody's going to be different. The system is composed of cash stable value funds, could be fixed annuities, could be cash values and whole life, depending on the right person, right? Something that's not going to go down and then get access to. Although always be careful of counterparty risk, right? Because there's no such thing as no risk. Second, we got Social Security. Most of us are going to— all of us have that or a government pension typically in America, unless you just never work, right? Unless you just never work and you don't get married. Then we might have corporate pensions, the plethora of fixed annuities and income annuities that are out there to sort of buffer that up. And then in the middle, you need the stuff that's going to fluctuate and sort of drive it. And it's— so it's kind of like 3 buckets and 2 out of the 3, sometimes, oftentimes 2 out of 3 are working and 1 isn't. And then sometimes, like right now, you know, well, usually 2 out of 3 are working, 2 out of 3 will be working. Um, you know, the reliable income should always be working, it's just it might get eroded by inflation. The stable value works when the stocks, when the financial assets are down, the fluctuate assets are down, and vice versa. So I think there's too much of a stress in terms of safety. And I think there's no such— I think safety needs to be redefined, in other words, as a lifetime of inflation-adjusted income. And I don't think we need to be scared of volatility and fluctuations, which now is a good time to test that, right? I mean, because the book got released right into a terrible market. And here I am saying you got to embrace— you got to embrace a portion of your assets, need to embrace this market. Yeah.

Well, like you said earlier, I mean, whenever there's these, the market is always going to find a solution to the problem. Um, isn't— wouldn't that fall under the efficient market theory?

Yeah, yeah, efficient market. And you know it's not the case because nothing would actually move. Like, you're in Alabama, which is fantastic, and so the Austrian School of Economics is big down there. I think it's at Auburn or U of A, and that's von Mises, that's Hayek, and they kind of reject a standard equilibrium, neoclassical economics. And what they say is markets are always trying to find the prices. It's creative destruction, right? It's a process of discovery. And so your problem creates a solution, your solution creates a problem, right? And human beings, that's how we get progress. So, you know, human nature, it's strange, and I could be wrong on this, I'm not a philosopher, but there's just some paradox which is like, I believe our human nature stays static, which is to say that more or less we're the same people our great-grandpa was, right? And if we were, you know, married and heterosexual married, our wives would be the same as our great-grandmas. So human nature is static. But I do believe that as a society we make a lot of progress, which is to say that I think our great-grandparents wouldn't be the same as they were if they were alive today. Right?

That's true. Yeah.

And so we can learn and we can make progress. We can go. So anyways, that's— look at that a little bit.

Well, it's been like a masterclass on personal finance and economics. I love it. This has been— this has been great for me. All right. You ready to go into an E9 rapid-fire questions?

Yeah, let's go.

All right. Question number 1: What is the last book you read?

Oh my goodness. The last book I read was actually a book on reverse mortgages. I could go get the title right now, but— and now I'm reading Wei-Faou's book again on reverse mortgages. So Harlan Acosta is the author and shoot, I wish I knew it so I could shout him out. I wish I knew. So also I'm listening. I'm always listening to books. So Steven Pinker's book right now, The Rational Optimist. Other. Go ahead.

Oh, I've actually— I've got that book on my—

so I mix them up. The Rational Optimist is actually not C.M. Pingree. Uh, The Better Angels of Our Nature is what I'm listening to right now on my, on my Audible.

Other than your book, what, uh, what is the number one personal best personal finance book that you would recommend?

Well, Morgan Housel's book on money, Psychology of Money.

That's a good one.

He is a very good writer. I would encourage everybody to sign up at the Collaborative Fund and read his stuff. He is worth reading. I don't often say that about people. I'm skeptical and kind of a little bit of a jerk. So that's good.

Not a jerk.

If you're an advisor, anything by Nick Murray.

Yeah, Nick Murray is really awesome.

Go soup to nuts.

Psychology of Money, though, is a fantastic book. That is a really great book. I just finished that book. If you, if you listen to this, go read that book. Okay.

Reason it's a bestseller. It's not a scam.

When you're not working, dodging hurricanes— for those of you who don't know, before we hit record, we were talking about him dodging the most recent hurricane down in South Florida. But what do you love to do in your spare time?

I love to read, and I was always a person who, who never had a hobby. But that changed 3 years ago when I started boating and fishing. And I chartered a fishing boat. I have a special needs daughter who's now 21. I was looking for stuff to do, so I like doing fun stuff with her, uh, you know. And I, and I chartered a boat, and then we liked it. And so I went and joined the Freedom Boat Club, which is fantastic. You have that in Alabama too, I think, a couple places. And I go boating in the summer 50 times. And now that I'm in South Florida, I'll probably go boating 200 times, you know. I don't know, I'll go like 3, 4 times a week and fish.

All right, you can fly anywhere in the world, where would you fly to?

Wow, fly anywhere in the world, where would I fly to? I want to always go to like Thailand and that part of the world. And I'm such an ignorant American that I— could I find on map? Maybe. But that's where I want to go, there. Right. I want to go there and I want to. But when I went there, the reason I haven't gone there is I want to be there for a while. I want to be there for like a month, a month and a half, and really like chill and have the kind of travel experiences that we had when we were in college and we didn't have any money, but we had a lot of time, right? Didn't have a lot of money. We had a lot of time.

All right. You're flying to Thailand. You can sit next to anyone dead or alive. Who would it be?

Ben Franklin.

That's good. I have an—

everything in America goes back to Ben Franklin. Just read Franklin's biography by— not his autobiography, which is okay, but his biography. Um, I'm gonna forget the author's name right now. Absolutely fantastic. And you'll see everybody, Carnegie, uh, Napoleon Hill, it all goes back to— we wouldn't have a country without him. He's unbelievable.

Fill in the blank. 10 years ago, I had no idea that this would be so hard.

Losing 10 pounds.

I like it. Best thing for you personally or professionally, however you want to answer this, best thing about COVID for you.

The airplanes were empty. It's true. They were. I traveled. I, I did not— I, I met with clients all the way through it. I, I do what clients want, so I Zoom it or I meet. So yeah, we— the world was— we could go. And also, I was running a business in Montana. We stayed open and we had a great year.

All right, non-native to your phone, iPhone, Android, whatever, what is your favorite app on your phone?

My cribbage game.

Cribbage.

Okay.

My cribbage game.

I love it. That's why, that's why I love asking these questions. You would never get this stuff.

I'm simple. Yeah, I used to play that with my grandpa, my dad.

All right, last question. It is the Club Capital Leadership Podcast. What is the best piece of leadership advice you've ever received?

Uh, I would say you got one mouth and 2 ears and use them in that ratio.

That's good. That's what the podcast has taught me. That's been helpful for me. Mike, this has been great. People want to connect with you. You've got a great blog. Tell them where to find you on the blog, where they pick up the book, where, where can they connect with you?

Okay. Go to simpleandbig.com. There's a couple things for you there. You'll see the blog. I made my book actually into a course, and due to regulations, I do not charge for it. It. So you can go on, click on a course, sign up, download it, have at it. Some people— everybody likes to consume information differently. And then if you want to get the book, you can get the book off the website, simpleandbig.com. Oh no, excuse me, it's All About the Income. I got two books, but Simple and Big 2 is there. And then also Amazon, go to Amazon, Michael W. Lynch, uh, It's All About the Income, Simple System for Big Retirement. And it's accessible, man. I mean, you read my book, I tried to make it fatter. I mean, it looks fatter than it is. It's opposite. Well, maybe it's— I don't know. Anyways, you can get it done in an hour, right? You get it done an hour on the beach. There's no doubt about it.

Mike's been great.

Appreciate it. Thank you for having me. Appreciate you.

Always try to give just a few recaps, some takeaways for me. Number one, he definitely talked about behavioral change and the importance, how much it's not just— it is about math, but it's more so about behavioral change when it comes to saving and planning for your retirement. Number 2, I thought just the simple numbers when he said, hey, if you save 10%, you'll never be poor. If you save 20% of your income, you can be wealthy. That's an easy thing that we all can go back and look at and say, am I— how much am I saving? What percentage of my income am I actually saving? And then I think he gave a really great distinction between income, affluent, wealth— what does all of those mean? Because a lot of times that begins to get, um, used interchangeably, and they're very different. And then it was a small comment, but I think it was really profound. When you are beginning to— you get a raise, you, you maybe, if you're as a business owner, you give yourself a raise— he called it driving a wedge between, instead of just beginning to spend that money, but actually put aside, in this case, at least put aside 20% of that extra income that you're getting now towards your retirement. So those were some of my big takeaways. Make sure you go and check out his website. He's obviously a fantastic author, really knows— that's a masterclass on financial planning and economics. I know some of that stuff got kind of nerdy, uh, for a period of time, but I know that you learned a lot from it. Go and check out his website, Simple and Big. Hey, biggest shout out to our podcast sponsors: Autopilot Recruiting, Coach P Consulting, DirectClicks, Club Capital, and Rock Solid Assistants. They are all fantastic people, are really helping all of you to be able to grow your businesses, help you individually, and they're just fantastic partners of the podcast. And if it wasn't for them, we would not be able to have and bring the type of value that we hope that we are bringing to you and getting a really good turn. Return on your attention. All of you know the importance of being able to recruit on a regular basis. Well, that's exactly where Autopilot Recruiting comes in. You know the importance of doing it regularly, but yet many of you have put it off to the side and not done that and not put that— made that as a habit. For those of you that have, that's awesome. But for the vast majority, you know, you need to be doing it regularly to be able to find some of those A-players. It's exactly where Autopilot Recruiting comes in. So make sure you go to autopilotrecruiting.com and use the code public capital to get started. David continues to send me testimonials and case studies of people that have gotten so much value of the money that they've invested in his coaching. Twice a week, every single week, you're going to be able to peek behind the scenes of some of the top performers. But it's not just for you, but it's also for your team. And he has an agent-only call every single month where he can— you can talk about things that are specific to just being an insurance agency owner, go to coachpconsulting.com and make sure you mention that you heard about him on the Club Capital Leadership Podcast. He'll give you your entire first month off. We're getting towards the end of this year. You know, you want to develop yourself and develop your team.

It's—

your team is the best leverage that you got. And so go to coachpconsulting.com. As we're going into 2023, you want to be able to start growing your business. All of you have The goal is to be able to grow your business, bring in more revenue so that you can set money aside for your retirement, as we talked about with Michael today. Well, you want to be able to get really quality leads. The marketing dollars that you're spending need to go as far as they can go. You want to make sure you're getting a good return on investment from those marketing dollars. And that's where DirectClicks comes in. Go to directclicksinc.com. Lastly, we could not do the podcast without the partners at Club Capital.

Speaking of money, what a great—

we were talking about personal finance. On the side, but your business can be a fantastic conduit into your personal finances. The more that you're able to have more profit in your business, more cash in the business that you can take some chips off the table, the more you can invest in your own personal retirement for you and for your family. But you got to be able to know those numbers and you want to be able to have some good numbers so you can make good decisions that are going to give you a really high investment. So go to club.capital and book a no obligation demo today. Hey guys, some messages from a couple people that, uh, went and talked to Tracy and the team at Rock Solid Assistants, and they are loving having an executive assistant for the first time, or what I've a lot of times referred to as a growth assistant for me in the business. They're helping me to get the most important thing that I really can't get anything back from, and that is time. Would not be able to produce this podcast without my team. From Rock Solid. Go to rocksolidassistance.com. All right, everyone, until next week— until next episode, actually— lead well.

So the big question is this: how do small business owners like us grow our leadership, develop our teams, and scale our business in a way that allows us to get our products and services out to the world yet still remain profitable? That is the question in this podcast, we'll give you the answers. I'm Bradley Hamner, and this is the Club Capital Leadership Podcast. Hey, before we get into today's episode, did you know that Club Capital is the largest accounting advisory firm for insurance agency owners in the country, providing monthly accounting, CFO services, and tax preparation? Check them out at club.capital.