There are many ways to fund your business, and self-funding could be one of the best ways for you. In this week’s episode, Doug C. Brown speaks with Sarry Ibrahim, financial specialist and the founder of Financial Asset Protection. Doug and Sarry discuss what it means to be your own banker, what infinite banking is, how to successfully reinvent yourself for continued financial success, and much more.
Sarry Ibrahim is a financial specialist, private money lender, real estate investor and member of the Bank On Yourself Organization. He helps business owners, real estate investors, and full-time employees grow safe and predictable wealth regardless of market conditions using a financial strategy that has been around for over 160 years. Sarry started this journey when he was in graduate school completing his MBA. He has worked for companies like Allstate, Blue Cross Blue Shield, Cigna Healthspring, and Humana before founding Financial Asset Protection, a financial services firm that focuses on one sole concept; the Bank On Yourself ® concept.
We’re going to bring an interesting topic to you from a man whose name is Sarry Ibrahim. He owns a company and it’s called Financial Asset Protection. We’re going to talk about a way to self-fund or self-finance, how to be your own bank in a way using a vehicle for doing this. I know these vehicles have been around for a long time. I’ve talked to people who have used them as well. It’s a cool concept because the reality is you either have to pay the interest out and you have to lose that interest, or you can pay yourself the interest.
When I first heard this, it was such a foreign concept to me. I don’t mean foreign in a bad way. I mean foreign like, “What is this type of process?” It’s backed up by life insurance. The first introduction I got to this was when I was helping a client who did financial help for people trying to get into college. What was happening is that the parents would have money in the bank, or the kids would have money in the bank, and that counted against them for getting financial aid in a big way.
These financial advisors would move this from point A to a life insurance type policy. They couldn’t do it last minute because that was one situation that is not legal to do, but they could do it over a few years period prior to it. They moved these assets over into life insurance. When they ran the numbers, even though they had the money in life insurance, it didn’t count against them.
I was like, “This is a crazy thing.” I started looking at this more and more. The reason I was grateful to have Sarry on here is that he knows how to apply it to the business world. We’re going to talk to him about it. Hopefully, you’ll find this interesting. This might be a bit controversial. It might mess with your mind a little bit. Stay open if you will. Let’s go talk to Sarry now.
Sarry, welcome to the show. Thanks for being here.
Thank you so much for having me on. I appreciate it.
I am interested in having this conversation because I know you and I talked a little before this, but I love this concept of how you think like a banker in your own business, reinvesting your money back in to get the business to snowball. How do you know it works in the business world? There are a lot of people who own companies and run companies who are reading this.
One of the top-line things that I’m asked all the time is, “How do I get more leads and customers?” The second one is, “How do I work smarter, not harder in my life when it comes to the business?” Let’s talk about thinking like a banker and reinvesting back into the business side and getting the business more from the employed side into this systematic or investor side of the business. My first question would be this, why do you think most people don’t think like a banker and that most people are building it on their backs?
I’m an entrepreneur myself. As entrepreneurs, we get too focused on the subject matter. If you run a marketing company, that’s all you know, marketing. That’s what you’re passionate about if you run a law firm, an accounting firm, or whatever the case might be. One problem with that is we get too focused on the subject matter and we forget about the money aspect of the business, which is usually the goal. The goal of entrepreneurship usually is to own a system that generates money.
As entrepreneurs, one problem is that we get too focused on the subject matter and we forget about the money aspect of the business, which is usually the goal. Click To Tweet
The problem though is that creating that system is different usually from the subject matter of your business, meaning that it’s two separate parts of your business. You have your subject matter business and the type of industry it’s in, and then you also have the creating the system, almost in a sense, firing yourself from certain duties and then outsourcing those or delegating those to other people within your team or out of your team. The point is that you’re not doing those tasks. That’s hard for a lot of entrepreneurs to let go of that, especially if you’ve been doing it for years. You’re good at it. It’s hard for you to give the wheel to somebody else. That has a lot to do with the next point of what does it mean to think like a banker?
Why is it hard?
Usually, when people start their businesses, there’s like a 2- or 3-year dip where they make less money than when they were employed somewhere else, or there’s usually almost a loss even from a tax perspective of losing money. There are a lot of commitments in play. They’ve put in a lot of hard work and a lot of money into their business.
To give up the wheel for somebody else to do it, there’s an ego thing there, too. You’re good at it. You’ve been practicing. You’ve been honing your skill, and now for somebody else to do it, it’s too much for a lot of entrepreneurs, which is a big reason why a lot of entrepreneurs don’t grow. It’s also an even bigger problem to not exiting the business.
About 85% to 90% of businesses are not properly suitable for an exit. Meaning that if somebody’s going to come to buy your business right now because you’re heavily involved in the day-to-day operations, it’s hard for somebody to combine the business and replace you. Without you, the business could suffer. That’s not a good thing.
You want it to be to the point where you have a sellable entity where you have this, in essence, a money-making machine that somebody else can purchase from you. When you have it that way, the business is far more beneficial. We want to get to the point where we have this entity that makes money, and then you own that entity.
What about the people that say, “I never want to sell my business. You’ll find me passed out in this chair behind my desk?”
I’ve talked to business owners like that. That’s completely fine. It goes into the other financial parts of it too, like expanding. If you wanted to expand, if you wanted to hire and market more efficiently, there are some typical problems in the financial services world. For one, the amount of interest we pay to other people to use their money. We calculate the total amount of interest paid to mortgages, credit cards, business loans, and other types of loans.
I’ve done this analysis hundreds of times. On average, we come up with over a ten-year period. Something like $250,000 in interest is spent on a ten-year period on average. It’s a big deal. A big part of our income as entrepreneurs and as business owners from the business goes to servicing interest on all types of loans. What if we could reposition that where we are the lenders in that situation and we are recouping that interest back into our pocket? It changes everything. It changes the way we view our business and the way we grow our business.
Let’s talk about that because you got my interest here. I have two bank loans from my companies. One of them is in the startup phase. It was a developing software. We did self-finance a lot, but we took some money on it. Let’s talk about how I bank on my own and whether we use my example or somebody else’s example, that’s fine. I have another question for you right after. How do I not pay the $250,000 in interest? What should I do? It sounds like, “Am I going to eat ramen noodles for the rest of my life?” type thing when I start thinking like that.
There’s a concept called becoming your own banker. It’s also stretched into the bank on yourself concept. I am a bank on yourself professional. It’s an organization that helps real estate investors and business owners become their own source of financing. It’s using a specially designed type of whole life insurance. There are typically two kinds in general of life insurance. There’s term life insurance, which is the way it sounds exactly. It’s what most people think about when they think about life insurance. There’s a permanent form of it that has cash value in it that grows, the cash value grows, and you can borrow it.
A lot of people are surprised. I was talking about entrepreneurship, interest, and life insurance. What do those three things have in common? I highly recommend you check out the book, The Bank On Yourself Revolution by Pamela Yellen. The book talks about the strategy. We’re using high cash value whole life insurance to become your own source of financing.
You would get life insurance policies designed especially for cash value, high cash value, and high cash value growth. You would put money into it and then borrow against that. When you borrow against it, you could use that to reinvest in your business or to pay down the other loans you have becoming your own source of financing. In essence, you’re like refinancing your loans through your whole life insurance policy and you become your own source of financing.
Why would somebody even want to do that? The benefits of doing that are, number one, the growth of the policy is going to grow tax-free. In most situations, the loans are tax-free, and the withdrawals are tax-free. You’ll get a growth in the policy about twenty times more than a traditional savings account. It’s typically an asset protection plan. There are a lot of backend benefits to using cash value whole life insurance within your business and having it fund your business, and becoming your own source of financing. Most importantly, the interest you would otherwise pay to other lenders, you recoup that back into your pocket over time. You earn compound interest over time.
There's a lot of backend benefits to using cash value, whole life insurance within your business, having it fund your business and becoming your own source of financing. Click To Tweet
I wanted to bring this forth because of this conversation when we first talked. A lot of people don’t think about this. One time I was helping a company. I’ve done this many times, but one company in particular that I was helping was doing kids for college. They were helping kids afford to get into these top schools.
When they had money in the bank and they had certain things in the bank, it counted against them on getting financial help from the government. One of the vehicles that this company used was life insurance. They moved their assets out of the banks per se into life insurance policies. They could still have access to these life insurance policies down the line.
It changed the financial ratios so that their children who couldn’t get college funding now could get college funding in the form of different ways. Some of it was free money. It reminds me of something similar to that. I can imagine people going, “I’m going to take my money. I’m going to stick it into something I know nothing about and risk.” The alarms are going to go off. How safe are these types of things?
I’m happy you mentioned that because that’s one of our strategy strategies. It’s called the College Funding strategy. It’s exactly how you mentioned it. We would move certain types of assets into whole life insurance. The reason being is that when you go to apply for certain things, it depends on the category. When you’re going through these financial asset reports for student loans and student financing and things like that, they ask about the parents’ assets. One of the excluded assets is whole life insurance. That helps you reduce the current asset size without reducing your net worth. That’s important. It’s a strategy.
How safe is it? We work with typically three insurance companies. These insurance companies have been in business for over 160 years. They’ve been in business for a long time. They have a proven track record of paying out dividends. That’s one of the things. When you have these whole life policies, you are a mutual owner of these insurance companies. As a customer, you’re a mutual owner of these companies. You receive dividends on an annual basis. The dividends are not guaranteed.
Again, we have a proven track record. These insurance companies have a proven track record of paying out dividends for over 160 years, even through the Great Depression, the 2008 crash, and COVID. In my opinion, they’ll continue to do so. We’re talking about strong, high rated insurance companies that are highly regulated. They have to have enough cash on hand to pay off life insurance and death benefits, to provide loans to their customers, and provide other financing resources. These are solo big companies.
There was a book I read. It’s called All About Annuities. The author talks about the power of life insurance companies and how strong they are. He mentions that in the US, there are about 2,000 life insurance companies. If you took all their capital and reserves and you pulled it together, it would be greater than all of the cash in the world from all the banks and oil companies combined. Trying to give you a relative comparison to how much cash life insurance companies are sitting on, they by far have the most cash. The safest place on Earth to put your money in is a US life insurance company because of how they’re regulated and because of their 100-plus-year track record.
I know I’m going to get myself in a lot of trouble with this statement, but the safest place to put your money is not crypto. I can already see the hate emails, and the hate mail come through on that one. We’re talking about a strategy. It’s a tax strategy, but it’s also a funding strategy where we’re not paying interest out to other entities. We’re paying the interest back to ourselves. Let’s say I took one of these policies. When I die, then that policy gets paid and it pays off all this debt. Is that how it works?
When you start off with a policy, life insurance is already so much more. I can’t give you exact numbers, but an example. Somebody does a policy. It’s going to be $10,000 a year. In year one, the life insurance might be $500,000 for that person, depending on their age and the state they live in and other factors. Let’s say the life insurance might be $500,000. Because we’re starting with $10,000 in premium and $500,000 in life insurance, the life insurance is already at a far greater start. The cash value that you can leverage and the life insurance are both going to grow every year.
The cash value will catch up to the life insurance. The cash value will keep growing to meet what life insurance is at age 121. That means if you did live until age 121, the cash value you have will meet the actual life insurance. For the most part, life insurance is always going to keep exceeding the cash value. If you had a life policy, you’ve been putting money into it, borrowing and your debt reaches $800,000 with the insurance company, the death benefit could be $3 million. When you pass away, they take a $3 million death benefit. They subtract the outstanding loan, $800,000, and they give the remaining $2.2 million to your beneficiaries. You always come out ahead because life insurance is at a far greater start than what the cash value is at.
I have life insurance now. If I swung my life insurance over to a different type of life insurance, I still would have life insurance. I now can have something that I can borrow against that when I pass away, I don’t have to worry about my family getting calls or whatever because the life insurance pays this thing off. It seems unreal that it’s real. I can hear people going, “It does make sense.”
It’s too far to think about. It’s too abstract and tangible to think about. That’s the problem with seeing it. “I lived to 100. I borrow $1 million. I have $4 million in life insurance. At the same time, how does it help my business now?” That’s the question.
That’s my next question, how does it help my business now? I get it. I get older. We’re all going to go there. I don’t want to go there, but we’re all going to go there. That’s done. I imagine my kids, grandchildren, and great-grandchildren. Great grampy had a $20 million policy. They’re all going to have a sad little four-minute party and then party like crazy because that’s what I’m going to ask them to do. It’ll be paid out of my life insurance. We know what’s happening down the line, but how does it help me now? Here we are, all the inflation’s happening, everything’s going on. Money is thinner than it was years ago if you look at a dollar value versus now. How does this help a business now?
I would start funding a policy. I started my first policy with $300 a month. It’s nothing too crazy. You don’t need to be a multi-millionaire. You don’t need to tie up millions of dollars to do this. I would start off with one policy and pay monthly. With these policies, the way they’re designed is month one, you put money into it, and you could borrow against it. That’s exactly what I would do. I would put money into it. Month one, put money into it, borrow against it, use it for other things, get the cycle going, the snowball effect going where anytime you put money into these types of policies and then you borrow against it, it keeps growing regardless of whether you took out a loan or not.
I like to compare it to real estate, for example. If you had, for example, a $500,000 property, and let’s say it had no mortgage on it, it was paid up in cash, that was the market value of that property. You go take out a loan from a third-party lender using the property as collateral, you take out a $100,000 loan, does it shrink the market value of the property? It doesn’t. It’s just a loan against the property. Assuming real estate value keeps growing, the market value of the property is still going to grow even with that outstanding loan. In a lot of situations in real estate, the market value of the property outpaces the cost of the capital. That’s also called arbitrage. The amount of money you’re borrowing on this side is growing, and then the amount of market value on your assets is growing.
The hope is that the market value of your assets outpaces the cost of the capital. This is the reason why the richest people in America will always borrow money. They’re the biggest borrowers of money because they’re borrowing money from banks and putting it into assets that grow in value, such as real estate, life insurance, and other assets that are constantly growing. They borrow against those assets.
This is the reason why the richest people in America will always borrow money. It’s because they're borrowing money from banks and putting it into assets that grow in value and they borrow against those assets. Click To Tweet
The market value of those assets exceeds the cost of the capital. This is how billionaires, banks, and hedge funds think. It’s not that they’re avoiding debt. A lot of people are confused with debt. They think, “If I have to go borrow money from somebody, it means that I don’t have the money, and I’m in a lower position.” The complete opposite is the truth.
Banks are targeting people with money, resources, and collateral to give them the money. That way, they could take that money and put it into assets and cashflow assets that are going to exceed the cost of the capital. That’s the reality of the banking world. They’re not trying to give money to people who need money to survive. They’re trying to give money to people with software, intellectual property, real estate, houses they own, and other assets they have that they can leverage and make more money with them.
It’s almost like the bank is betting on you. They see your idea, they see the collateral you already have, they see your credit score, they see all these things you’ve already done, and they say, “We can make a lot of money with this person. We’ll give them the money. They’ll make more money with the money that we’re going to give them.” That’s the reality of it.
If anybody doesn’t believe that statement, go try to take a bank loan on something traditional and see what they put you through. The reality is that even if you’re in a great financial position, sometimes if your ratios are off on the business, you could have $1 million in the bank and then want to go borrow $500,000. By the way, this is a true story. You spend down your business so much that the bottom line is pretty meager on the bottom line. In many cases, banks will not give the loan. Even though you can show them $1 million in their bank, they will not give you a loan unless it’s secured with the $1 million for the $500,000.
That is a story that happened to me. They want to secure your asset there in order to give you the money. However, if you have an idea like you’re talking about and you have tangible assets that they can pull against, they’ll give you money much easier. It’s counterintuitive I have found to the human conditioning that we’ve all been brought up with to think like what we’re talking about, that you could have an intangible that’s appreciating.
It brings it to my next point. Any time you go take out these loans from the insurance company, there is no underwriting at all. The only thing the insurance company is looking at is how much cash value you have. You could take out 90% of that. A simple example, you have $10,000 in cash value. You go to the insurance company. You could borrow up to $90,000 as a loan that you borrow against the policy. The policy keeps growing and then now you pay back the loan whenever you want. It doesn’t show up on your credit. There is no credit rating with this. There’s nothing. It’s a private loan between you and the insurance company. It’s not public information. Nobody can look up this loan. This becomes powerful.
Number one, what if you’re a business owner? What if you have all these great ideas, you have $1 million in cash, but you can’t get the additional loan with this policy? You could skip all of that. You can go directly to the insurance company. Whatever your cash value is at that time, you borrow 90% of it. You can pay back monthly, daily, or annually. Whenever you want, you can pay back that loan and then recycle that process. It helps in situations where you’re not able to get financing. It also helps in situations where you are able to get financing but you want more financing. For example, in real estate. You have a property that’s $100,000.
You can get $80,000 against it from the bank. The bank wants you to put $20,000 into the property. You can go and borrow that $20,000 from your life policy. You could tell the bank. The bank’s going to ask you, “Where’d you get this $20,000 from?” You can say, “I got it from my whole life insurance policy.” The banks use whole life insurance. They understand. They’ll take that as your own equity, not as leveraged money.
You didn’t borrow the money from somebody else. You borrowed that money from a life insurance company that has your whole life insurance policy. They’ll look at it the same way as if you took $20,000 out of your bank income because they know that you’re not on the hook financially for that $20,000. It’s a non-recourse loan. You’re not held liable.
If I went and I borrowed $20,000 from somebody else, the bank wouldn’t like that because it’s almost like they’re bringing in another partner on that property. The bank wants me and them on the property only. They don’t want unknown partners or unknown people. When you’re using whole life insurance alongside these other loans, it completely eliminates that problem. It’s just you and the insurance company, which is you in essence. It’s not additional creditors. There’s no other recourse.
The only recourse is death. Once you die, they get their money back regardless. I wanted to bring this up because I know this subject matter might be a bit like people are thinking, “It still sounds a little sketchy. It sounds a little out there.” I happen to know a lot of wealthy people who are using these types of methodologies. Let’s go back to the startup phase. You start a business up, you’re building it, you’re trying to survive and you’re taking as much out to pay your bills and the company as possible.
Everything comes back and then goes out again. You look at the thing at the end of the year and you go, “We survived this. We’re at our next level.” We start building a little and we start building some more infrastructure into the business. We try to get other employees in and do all of that. I still think the mentality, because we’ve been trained to try to keep it all that we are still thinking that way as entrepreneurs and as we grow a business. I had to learn this the hard way because eventually, you get to a point where you can’t grow anymore.
“Now I’m not supposed to keep it all. I’m supposed to keep a part of it as an owner.” If we think about that from the beginning, we would immediately start going, “I need this asset and this asset,” but we don’t do that because we’re like, “How do I even survive? How do I pay my bills?” We habituate ourselves, I believe, to keeping it all. As we start to grow, we still have this “I got to keep it all” mentality. We don’t go out and reach out to things like these vehicles that we’re talking about because we think, “If I give that away, then that’s gone.” The reality is that you’re not supposed to have it all anyways.
At the end of the game, death, if you will, as they say, you can’t take it with you. Maybe you can, I don’t know. I’m not looking forward to finding out either way. The point being is that our brains as entrepreneurs get us in a position where we go, “This sounds risky.” It’s not the norm. We weren’t taught that way. We’re supposed to go back to the banks. “I got to keep it all. I got to give up part of this. My head starts swelling with all this stuff.” What happens is that people get into fear. They don’t objectively look at this thing in the capacity of how the people who are wealthy look at these types of things.
I work with a lot of clients. Sometimes the clients are like, “This makes perfect sense, but I have to worry about the bills. It’s too far to think about.” I’m a big fan of creating obstacles to counteract your human nature. We’re trained. When it comes to our human nature and money, they conflict. Naturally, we’re not good with money as humans. There’s a lot of stuff we have to work on. I’m a big fan of putting yourself in a situation where it’s already almost too late.
One of my favorite ways of saving is forced saving. If you told me to put money aside every month, for me and for most people, it’s hard to do that. I see all the time working with clients in these financial analysis meetings, it’s hard to be like, “I promise I’ll save $500 a month.” People won’t do it. Now, if we set up a payment plan that automatically drafts out of your account on the first of every month, $500 a month, it changes everything. Now the statistics flip. Now 99% of people will do that. Somehow, someway you will afford it too when you position it that way. That’s how I would position this.
I would recommend you read some content and read about this concept. Check out the book, The Bank On Yourself Revolution. Check out the book, Becoming Your Own Banker. Listen to podcasts. Listen to our podcast. Listen to podcasts that talk about this strategy called bank on yourself or infinite banking. Pretty much the use of cash-value life insurance.
Once you feel that it’s a good idea, then pull the trigger and continue with it. Put yourself in a situation where it’s already too late, it works. You only need a certain amount of evidence to proceed with anything you don’t need. If you go back and you look at all the decisions you’ve made in your life, it wasn’t like you had 100% conclusive evidence that that thing was going to work that you proceeded with. It never was, but you had enough to proceed with. It’s a big difference. You understand this concept. It sounds like a good idea. Proceed with it. Put yourself in a situation where it’s already like you’ve gone too far with it now and see the benefits of it.
I’m not sure if it’s Singapore or one of the countries in that area that do forced savings, forced investments, or something like that from their folks. I don’t think the government wants them on their payroll at the end. That’s my personal bias. It’s interesting when we do things like this and force ourselves. You don’t even have it anymore. It’s like taxes. It comes out.
You’re like, “That sucks, but still, I got to pay the taxes,” type of thing. Something magical happens when we do things like this. We figure out ways to overcome and rise up. That’s part of our system to keep people down and poor at the end, especially. I appreciate you bringing the subject matter forth. Let’s say people go, “This makes a little bit of sense.” What was the name of the first book?
The Bank On Yourself Revolution by Pamela Yellen.
“I read the book, all that stuff, I want to talk to Sarry now.” How do they get ahold of you?
You can go to ThinkingLikeABank.com. You could schedule an appointment. You could check out our podcast. You could download an eBook. You could send me an email. All of that is found at ThinkingLikeABank.com. I’d love to work with you, get to understand your business needs, your wants, and your goals, and see how we could position this to get you to the next step.
I appreciate you being here on the show. Thanks for bringing it. Thanks for probably making some people go, “What is this guy talking about?” and others going, “That sounds amazing. Am I going to end up in jail?” We might have created a little controversy on this one, but that’s okay. It gets people thinking. The reality is, I know these vehicles have been around for a long time.
I didn’t invent this. This has been going on for over 100 years. The wealthiest families in this country have been using it. Politicians use this. This is not something that I made up right now before this show. It’s a proven concept and strategy. There’s a lot of content behind it. Once you find that content, there’s a lot of it out there.
If you had made it up prior to this show, I wouldn’t have had you here anyways. We don’t play that way here. That’s the way it goes. Thanks for being here. Come back on again. I’d love to have you back again. Folks, reach out to him. Reach out to me. Let us know what you’re thinking of. Please, don’t send me hate mail for the previous comment that I said on crypto. Until next time. Thanks, Sarry.
Did you ever think you could be your own banker? I never thought about this early on in my life, especially because it felt risky. It was so out of the normal. When I started talking to people who had a lot of money and I started hanging around with people with a lot of money and I realized they were using some of these vehicles, I was like, “It’s eye-opening.”
My point being is that if you are looking to grow and fund something, you can either do it from internal funding or external funding. Internal funding means you sell more. That’s what it is. Sell more for profit and you internally fund it. External funding is you go borrow it somewhere. The question is when you go borrow, do you borrow from yourself or do you borrow from another entity? That’s what it comes down to.
I hope you got a lot out of this episode. If you like the content of this, let me know. If you don’t, let me know. I’d like to know. I want to get feedback from you. If you have a subject matter of expertise and you want to be on this podcast, let us know. Reach out to YouMatter@CEOSalesStrategies.com. If you know somebody else that has the expertise, reach out. We will answer all inquiries. We’ll see if it’s a fit for the show or not. We’ll have you on or have the person that you refer us on.
If you love the show, please go give it a five-star review. If you’re looking for yourself or someone who wants to be in the top 1% of earners, those elite producers, and through selling at least making $500,000 a year or up net selling, reach out to me at Doug@CEOSalesStrategies.com. Let me know what you’re thinking. If you’re a company looking for elite producers, also let us know that, too. We have access to those folks for you. Until next time. As always, go out and sell something. Sell something profitably, play win-win, and help other people out. They win, you win. It makes the world a better place. Everybody’s a bit happier. To your success.