Building wealth isn’t just about making money—it’s about maintaining control over it through family banking. In this episode, Wade Reed sits down with Gary Pinkerton, a financial strategist and former Navy officer, to break down the Family Bank Strategy—a powerful approach to growing and protecting wealth. Gary shares his personal journey, from his military career to a financial awakening after the 2008 market crash, and how it led him to rethink everything about money management. He dives into why traditional financial advice often falls short, the dangers of handing over control of your wealth, and how liquidity and long-term thinking are key to financial stability.
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The Family Bank: How A Submarine Captain Navigated Financial Uncertainty To Build Lasting Wealth Part 1
I wanted to give you a special introduction to this particular episode. This is one of my favorite episodes on a topic called the Family Bank Strategy. I brought in one of my colleagues. His name’s Gary Pinkerton, and we got talking, and it got a little long-winded, but there’s some great stuff in there. I have opted to cut this one in half. I apologize. You are going to be left on a little bit of a cliffhanger in this first episode. There will be part two. Please be patient as you wait for that, and I promise you there’s some great stuff in there. Thanks for reading and enjoy this episode.
Meet Gary Pinkerton: From Military To Finance
We have begun a series of episodes on the topic of what we call the Family Bank Strategy, and as promised, I brought in one of my colleagues from Paradigm Life. His name is Gary Pinkerton. Gary, hello.
It’s good to be here. Thanks. I didn’t know you had already set it up ahead of time. That’s cool.
I let my readers know on my last episode that I would be having some colleagues on. I’m doing some interviews, so I’d like to fulfill my promises. Let me introduce Gary briefly, and then he can take over and tell you more of his story. Gary and I have worked together for years. We have known each other longer than that. We had a mutual client that I don’t know if he remembers this, but I remember seeing his name on a life insurance policy that the client I had was coaching. I’m like, “Paradigm Life, Gary,” and then we met shortly after that at some event, probably Truth Concepts, and started to develop a little bit of a relationship.
When I transferred from my work with Wealth Factory to my private practice in coaching and joined Paradigm Life as a life insurance agent, Gary and I started to develop an even better relationship. We have done a lot of work together over the years. I have gotten to know Gary’s backstory a little bit. He comes from the military space for several years and I will let him tell you more about that.
What I found interesting is that he was in the typical financial planning model for the first twenty years of his preparations for his future, and then he went through some severe financial crisis stuff. He then found what we call the Family Bank Strategy and applied that. He has some interesting insights into how it works practically and the transition of a career from his military days to more of an entrepreneurial business venture now. Gary, why don’t you tell us a little bit more of the details on that backstory?
I won’t speak for everybody out there, but I have met many people who are like me in that every experience they have had, every galvanizing experience, big negative experience, typically the positive ones make an impression too, but the negative ones. Somebody said that negative emotion is 3 times more powerful, 10 times more powerful, or something like that.
Much of my stuff was galvanized as a kid. I grew up in the Midwest in the late ‘70s and early ‘80s. Jimmy Carter was president during a lot of my formative years, and then Ronald Reagan came in, and it felt a whole lot like it does now. We made this shift to the Trump administration, and everybody’s super optimistic. Everybody’s making investments.
It was very similar to that and the years that preceded that, there was an oil embargo going on. There was a hostage crisis. Our president, Jimmy Carter, a graduate of my great institution, the Naval Academy. I knew him personally. Rest in peace there. He was a good person, but maybe not the best, most motivating leader.
I remember him coming on and doing a national broadcast about wearing sweaters to cut down on energy costs and stuff. It was this very scarcity mindset that I remember as a kid. The interest rates started rising pretty heavily in the early ‘80s, and we had this large dairy farm. I didn’t understand any of these financial lessons back then. This young brain was not yet developed. I’m in high school, I was hating the fact that all my friends get to go play sports, and I am baling hay from sunup to sundown.
What irked me was when my dad would hire them to help us bring the hay bales in, and they would get paid. I wouldn’t get paid. I knew Dad didn’t have the money, but it also was frustrating. He’d show up to school in an old car or whatever, and I was driven to make money and have a different future. I’m running businesses to put food on the table. My father’s health is failing. It was a rough area. Thankfully, they had always instilled in us to study hard. You have that whole jingle from Robert Kiyosaki of, “Work hard, get good grades so you can get a safe, secure job,” and that is what I wanted.
I got a free ride to the Naval Academy, and I went there. I have always wanted to be a rocket scientist. I wanted to be Elon Musk back then, so the highest-tech thing we had was nuclear submarines. I got the opportunity to join that, probably like the last dude who got in but worked my tail off in nuclear submarines. I commanded one from 2008 or 2009 to 2011.
My first financial experiences there as a kid were simply I wanted to have more money, more material things, and be able to raise a family. I didn’t want to feel like I saw my parents feeling when they couldn’t give us things that they wanted to give us that broke their hearts. I didn’t want anything to do with that. If I was going to raise a family, they were going to get what they wanted. Now, as an adult, I cringe even hearing myself say these things, but that’s where I was focused.
I started the Naval Academy with a negative $2,000 net worth. I had to take out a loan to buy uniforms or whatever it was to get accepted. Fast forward to now having commanded a submarine and been a highly paid member of the military with bonuses and things as an engineer, a very tough but rewarding career path, all of a sudden, throughout the ‘90s, we had this massive run-up in the markets. I was doing what everybody else as a W-2 employee was doing at the time, which was handing your money to the professionals, and they take care of it while you pay attention to your job. All that stuff seemed to be working great.
What wasn’t working great was my interaction with my two young boys. Reflecting on experiences with my father, realizing now that I’m mature, what matters is what you leave inside your family as a legacy, not the financial wealth you leave to them. My wife was worn out with all this moving around and not being able to run her career. The kids didn’t know me.
I wanted to command that submarine, and I knew that as soon as I was done with that, I could retire. I said, “I have turned a negative $2,000 net worth into almost $1 million in a 20-year career. Now I can retire, spend time around my boys, and finally let my wife get her career going, and everything will be great.”
I go off, and I pay attention. This is a Bad News Bears story on this submarine. We had a lot of problems, but we turned it around. It was an amazing thing. It was the top submarine in the Pacific at the time we were done, but I spent all my time there trying not to get fired. No kidding. Two and a half years. When it was over, timing’s everything. The Great Recession was the entire time that I had my submarine, and I didn’t even know it was happening. I had no idea.
I imagine you’re close to 40 or 45, somewhere in that range.
Yeah.
You’ve got a lot of life ahead of you, but in the military, you have an opportunity to retire. Is it 20 years in or 25 years in?
I did 26.
You are thinking, “I can get out of this career that I have been in. It’s been rewarding but challenging once I get done with this commander role on this submarine. You’ve got almost $1 million built up, so you are imagining that’s going to be the nest egg that you are using as part of your retirement plan.
If you do a pension calculation on what sum of money you would have to have built up to be able to have this military pension pay you for the rest of your life, if you are starting at age 40, you’re an annuity guy, so when you do those calculations for clients, those are big numbers. It was probably $2.5 million value of the pension that I would have gotten even at twenty years of service. Much bigger if you go to 30. I was like, “I have $1 million, and I have the equivalent of a $2.5 million annuity here called my pension. We’ll be fine,” and we would have been, had that played out.
There’s more to this. Is this where the negative part comes in?
The Turning Point: Losing Half A Million In The Market Crash
My mindset was that I pay attention to the job, and somebody else pays attention to the finances. Looking back on that with what I know now, that is silly. There’s not any part of those, however many pillars you want to have. A lot of people say there are 6 pillars, there are 8 pillars of your life. There’s spiritual, there’s family, there’s religion if it’s more than spiritual. There’s financial, there’s fitness, health, and none of those things you can outsource to somebody else. I can’t say, “I’m interested in paying you $200 a month so that my wife is always happy with me.” That’s just that’s stupid.
“You go work out, and it’ll help my health.” However, we have been sold this bill of goods that if you hand your money to somebody else, they will make sure that you have the financial future you want. Guess what? That doesn’t work. It sounds stupid when somebody says it to you, and you have to be personally involved, somewhat educated, and vet the people who are handling your money if you are going to be successful.
I come back from the submarine, I get a month off after I give up command of the submarine to the next individual, and I start breathing. I’m paying attention to the world, and I look at my accounts and realize our accounts that were at $1 million were less than $500,000 in 2011 following the Great Recession. There was this incredible polar opposite world that I’m now presented with. I had trouble balancing that.
On the submarine for two and a half years, every time we got a little seawater leak, had an enemy ship show up or didn’t understand what was going on, people would bring the procedures. They were very well trained, and they would say, “The book says to do this, potentially this. My plan is to go do this one thing,” then, an hour or two later, they’d come back and give me updates. I felt like I was informed, in control, and could somewhat have some influence on what the future looked like.
On the other side, arguably far more important than my career survival, maybe not more important than the 165 people on my submarine, surviving safety was important but big picture, it’s pretty doggone important that you don’t lose all your money, yet I thought that I could get no updates on that. The people who had my money didn’t call, email, text, stop by, send a letter, or anything. When I questioned it, I got answers that were not satisfying. “You are in it for the long haul,” “We all lost money,” “It’ll come back,” “You are dollar-cost averaging,” and all those kinds of things. None of those checked with my sense of sensibility.
At the time, I couldn’t explain why, but I had this strong sense. I found Robert Kiyosaki during that period, went to a couple of seminars, and had this sense that I needed to put my money into things that I could control and have my hands on. I pulled all the money out of the markets to put it into real estate over the next year or two.
Even though it was in a 401(k)-type plan, am I right?
Maybe a third of it was in the 401(k) world. I did get that moved over to self-directed. I did essentially the same stuff, but a large portion of my money was not in the 401(k) because, at the time, we couldn’t contribute as much to that environment. My wife and I were contributing more than 50% of what we made from day 1, and we did it for 20-plus years. There was a large brokerage account.
There was a certain amount of control you had over that portfolio or that portion of your portfolio that wasn’t government-controlled, but you still had about a third of it that was in the government plans. I don’t know if you’ve heard of this, but the idea of self-directing. Most of us get sucked in if we have 401(k)s or IRAs where you can only invest in the stock market, mutual funds, and things like that but there is a way that you can, once you are in control of your plan. It’s like if you leave employment, you can transfer it to an IRA, at which point you can do some self-directed investments.
Multifamily real estate is a common one that comes up. Oil and gas investments might be one of those. A number of other what are called alternative investments suddenly become available under certain guidelines that you may not have been aware of. That’s what Gary’s referring to when he says self-directed.
You can get even more advanced in that. I was attending a course with our family bank members program that we are involved with, and they were talking about a program called Rollover for Business Startup where you create your own 401(k), start up your own business, and you can do this with retirement funds. There are people out there reading who will say, “That’s a prohibited transaction.” With the very basic tools like an IRA, it is prohibited but it’s not across the board if you get advanced. There’s crazy stuff you can do with that if you take the time to educate yourself.
We have a joint client we met with for an annual review. This guy, a W-2 earner in a very high-earning period of his time, $200,000 to $300,000 a year coming in, had built up a bunch of money in his 401(k). He started to understand this and realized, “This might be a path out of my W-2 job into a business venture.” He’s done this with some support from tax strategists to give him the I’s that needed to be dotted and T’s that needed to be crossed, rolling out his 401(k) funds into something that he can have control over, which is his own business. Most people are unaware that that’s possible.
That’s not the purpose of this episode, but you guys need to know there are a lot of interesting opportunities if you feel stuck in government-qualified plans and are looking for alternative things. If you don’t want to incur a huge penalty tax by taking it all out at once, there are some interesting ways you can find uses for your benefit. This rollover for business structure, or ROBS structure, might be worth taking a closer look at.
The Importance Of Financial Control
Part of what you are talking about is the need for a certain level of control over money, a certain amount of knowledge, and being aware of what you have, why, and how that’s going to help you moving forward. The pros and cons, the risks and rewards, and the nuances of how these things work so that you have a sense of influence over what happens, not just being subject to the whims of the market.
I wouldn’t say that that’s part of it. I would say that’s the core takeaway lesson learned from all of my experiences, and that goes back to those pillars of your life. If you do not have involvement and some level of control, you are gambling. You are gambling with whether you stay alive a long time with your health, you are gambling with your relationship, whether your spouse stays with you, you are gambling with whether your kids are going to hang out with you. If you do not have some level of control and involvement, the more, the better, then that portion of your life is going to fall apart.
If you do not have involvement and some level of control, you are gambling.
I don’t know if it was Office Depot, Office Max, or Staples where they had the easy button. Many people want to push the easy button, and people who are selling you the product will tell you that you can push the easy button, and you can. What they don’t tell you is that the thing’s going to blow up in the background at some point.
I have met people who have been lucky for 3 or 4 years, but then it blows up, and they don’t know why. They can’t predict that it’s going to. Thankfully, in my life, I’m so grateful that my stuff typically blows up right away. I don’t get this lull into, “You are a genius. You are doing so well.” That doesn’t typically happen for me. I get to learn the lesson and move on.
I know you’ve talked with your audience about that controlled side. You’ve talked to your readers a lot about the hierarchy of wealth or we have covered it at least and that was the thing that resonated when Patrick Donahoe started talking to me about that as a client in 2011, and I have been forever grateful. I talk about it with every client. When a client calls me, my thousands of clients, the thousands of families that I have now, and say, “Should I use a policy loan for X?” You do the same thing but the first question is, “Here’s what I have for your financial situation. Do you think this is accurate? Would you say this is accurate?”
They’re like, “No, I need to update some stuff.” “I can’t answer your question then. Let’s update it.” Once they’ve updated it, we represent their situation on this hierarchy of wealth. Simply put, all it is, is imagining is that you are building your financial life for the family, maybe even for generations, and you put the bricks in the bottom layer first like the Egyptians would if they were building a big pyramid. You move to the next layers when you’ve got that solidly filled out. You didn’t skip any bricks down there. You are building from the bottom up, and the bottom is where things are lowest risk, highest control, and maximum certainty.
It’s savings first, then you get into the investing world, and those are things you directly control and are involved with, like your own career. I did a great job there. My own primary residence. You then move up from there into things that you are passive with and then things you are speculating on. As a purist, I always tell people that if you don’t know specifically the name of the person and their experience level, who has your money, and everybody between you and your money and you don’t go to the board meetings, and you don’t walk around on the shop floor at Apple seeing what the new product lines look like, then you are speculating. You are gambling.
That’s my whole point. I was gambling for twenty-plus years and in the run of the ’90s, it worked great. There are people right now who are in their late 20s or early 30s who have had the same experience. They can throw a dart at the wall, buy that stock, and it goes up, but it’s not sustainable because you don’t have that level of control.
Whole Life Insurance: The Ultimate Financial Asset
There’s a whole conversation to be had about the sustainability and stability of your financial life. I have a quick story. When I first started in life insurance in 2009. I had spent years in banking. A friend of mine introduced me to life insurance, and I was hesitant to get in because I knew it was going to be difficult to have these conversations with people. When I finally decided it was the right thing for me to do because it checked off most of the criteria of what I wanted in my ideal career path, the types of autonomy and compensation, etc., I said, “I better check that out.”
I started seeking out mentors, and one of my mentors, a guy who’d been in business for 25 to 30 years at that point in time, agreed to meet with me. As I walked in, a guy that I had known at the bank I was working for walked out. I said, “HI,” and walked past, then went and talked to this mentor. I said, “I know that guy. How do you know him?” He said, “That’s been one of my clients for 25-plus years. We had an annual review.” I said, “What did you guys talk about?”
He said, “We reviewed his life insurance and some of his other investments. He commented to me that the only thing that has never gone down has been his life insurance. He’s been a business owner. He’s had real estate. He’s had stock investments, but the only thing that’s ever gone up has been his life insurance.” I’m like, “I can get behind an asset that never goes down in value and supports people’s stability in their financial lives.“
That lit the fire under me in 2009, and I started to realize that there’s something meaningful to the use of whole life insurance in somebody’s financial plan. I didn’t quite understand it fully at that point, but I started to see the light of where that could fit in, and then it was about five years later when it finally clicked when I went to Truth Concepts. There’s this training by a guy named Todd Langford that helps us as financial advisors use financial calculators to tell the whole truth about how financial assets work.
We look at the tax, the investment costs and the different variables of inflation. We can look at all kinds of things to help tell the whole truth mathematically about money, and we looked at market rates like what you are talking about versus the stability of life. The average over the history of the stock market, when we look at the actual ups and downs, was like 5.5% to 6%. I went, “It’s not 8%, it’s not 12%.” The average was 8% to 12%, depending on your timing in the market, but the actual was lower because when you put a dollar in and experience the ups and downs, it curates this lower number.
I was like, “I have been told a lie my whole life up to this point, and now I finally see a 5% to 6% return in the market, which is still taxable, versus a 5% return in life insurance, which is tax-free. Why would I put my money at risk in the stock market?” It was like, “Bingo.” Lights went off, and I started to truly see the value of this type of use of whole life for what we now call the Family Bank Strategy.
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Thanks so much for reading part one of this episode. I apologize that there’s a bit of a cliffhanger here, but the next episode will continue that on. Give yourself a little bit of patience in waiting to get that, but we’ll see you in the next episode for part two.
Episode Resources
About Gary Pinkerton
Today, Gary lives on the Florida gulf coast with his wife, Sue, and their two sons. He is passionate about improving people’s lives through The Perpetual Wealth Strategy, a comprehensive approach to financial planning that he first learned about as a client of Paradigm Life in 2011. Gary’s mission is to empower his clients with the financial strategies they need to achieve their goals and secure their futures. Whether you’re interested in real estate, small business, or simply want to learn from the best, schedule a free consultation with Gary today and take the first step towards financial independence.