Private Banking, Wealth Preservation, and Asset Protection
Updated: Jun 3
Note: transcription provided by Otter.AI, which is a technology company that develops speech-to text transcription and translation applications using artificial intelligence and machine learning.
Christopher H. Loo, MD-PhD: Today we're with Seth Hicks, Esq. of Private Banking Strategies, who are both wizards when it comes to growing wealth. They're here to educate us on how to launch an entirely different realm of wealth without working harder. The team at Private Banking Strategies have established themselves as leaders in the industry, bringing over 100 years of collective experience in helping people achieve and keep financial freedom through private banking. And they've helped countless businesses, families and individuals achieve things they never thought possible. So today, Seth is going to talk all about private banking, what it is, the strategy. So Seth, welcome.
Seth Hicks, Esq: Thank you. Thank you, Dr. Loo, I’m really, really glad to be here and really glad to speak to your audience.
Christopher H. Loo, MD-PhD: Yeah, yeah. No, we were backstage talking about your background and what you're doing in this very fascinating way because a lot of physicians, my clients, my followers, they really don't know what private banking is. So give us your background and tell us a little bit more about who you are, what you’re about, and we’ll go from there.
Seth Hicks, Esq: Sure. I went to law school at Pepperdine Law. And when I graduated, I went into a large firm in Dallas called Winstead, and worked in commercial real estate transactions. After doing that, for a number of years, I wanted a little bit more diversity and I kind of missed the beach back in Malibu. So I went back to LA and I started a business boutique firm with three other senior gentlemen, and we kind of created a niche practice that catered to real estate and business entrepreneurs. And I had exposure to the commercial transaction side of things that I was doing at Winstead, putting together real estate transactions, and also got the opportunity to litigate trials and do some trial work.
And what that really focused me on is how to protect a client's assets and how to structure transactions and mitigate risks in a way that serves them best. But the real epiphany came when I met my friend and partner Vance Lowe, and discovered private banking strategies. And he had been a protege of a man named Nelson Nash, who brought the Infinite Banking concept back into our culture in the 70s, and 80s. And Nelson Nash is known kind of as the Godfather of infinite banking. And what that really focuses on is high cash value life insurance contracts, which are utilized as a banking tool. Whereby one always gets the money back that they're putting out in investments, and they use their own private bank, like a third party bank would be used for financing for expansion.
But where I bought a new light bulb into this strategy is in the asset protection side of it. And what I mean by that is. In many states, you've got the legislature who created laws post Civil War to protect their citizens from Northern carpetbaggers. And the statutes on the books in southern states like Florida and Texas, and many others like it, is such that these life insurance contracts are exempt from liability exempt from creditors, and that comes in really, really favorable and has a great benefit to many Have our doctor clients who may be practicing in a high exposure, high liability type area. And they keep high cash value in normal bank accounts, and it's subject to being taken. And we like to say, we help clients keep what they make.
So that's kind of a general background, we're not going to dig in further as the other benefits and features, but one of the key fundamental principles is asset protection.
Christopher H. Loo, MD-PhD: Yeah, that's so important, especially for physicians, high income earners they say, we spend a lot of time, we generate a lot of revenue, but a lot of us, we don't know how to keep it. So a lot of it's like, expenses, liabilities taxes, inflation, and, also asset protection, divorce, lawsuits. So, tell us a little bit about some of the features of your company and, and how it's different from traditional other vehicles.
Seth Hicks, Esq: Well, private banking strategies focus on seven pillars, we call the Seven Pillars of private banking strategies. And the first is asset protection, like I mentioned. And many of our doctors, that's their primary motivation and reason for utilizing private banking strategies when they come in. But when you start to drill down further, they understand that everything that's in your policy, it grows and compounds tax free. And it works as a retirement plan as well, for you to be able to peel out distributions in latter years, or whenever you want to retire, without any tax event whatsoever.
Another aspect of things is, in this changing culture that we're seeing around us, banking is changing. And the ability to control your funds and liquidity are changing as well. We've had clients that are banking with big box banks like Wells Fargo, Bank of America, or Chase, and they have a wire come in, that's larger than normal for their routine balances. And the bank doesn't release their money. And they have to go through KYC, and sourcing processes. And sometimes it may take months, whereas with the banking of cash into your private bank, you have complete liquidity. It's effectively, how much money do you want, where do you want us to send it, and it's there by wire.
So you've got financial privacy, with, with private banking strategies, where you the life insurance companies, they're not subject to the Dodd-Frank Act. And they're not subject to centralized banking laws, whereby a client is really not represented by the bank, the bank is acting as an agent of the government. And whereas the life insurance company, that things are financially private, the relationship is a matter of private contract. And it is completely protected by statute in many states.
And let me just mention now, anyone who's listening that wants to kind of do a deeper dive into your particular state. At the end of the podcast, we'll give you some contact email that you can email me and I can give you a 50 state worksheet that tells you what your state provides protection for and doesn't. If that would be of value.
Christopher H. Loo, MD-PhD: Yeah, absolutely. And just, I know, some of the listeners, I know would like for example, just explain what KYC, Frank-Dodd acts just a brief so that they can be well versed in these types of terms?
Seth Hicks, Esq: Sure. KYC is Know Your Client. It's an acronym that stands for no your client. So the big box banks like Wells Fargo and Bank of America, like I mentioned, they're bound by these regulations, where they dig into who you are, what your business is, why you want $5,000 cash if you're trying to withdraw money, and why they they raised their hand and they make they have reports. anything that they think is suspicious, they will report to government entities. And so, the KYC process has kind of become blown out of proportion, in my opinion, whereby your bank is not your trusted agent and advisor. They're, they're more of an enemy. And like I said, I've had a number of clients that have sold a large piece of real estate and they have incoming funds, or perhaps this is a big one, with cryptocurrency liquidation. And with cryptocurrency liquidation, banks tend to lock up funds, and I've seen them close clients accounts for large wires coming in, I've seen them say we're not handling any cryptocurrency funds. And there are well established channels like Coinbase, that are fully American gateways to buy and sell cryptocurrency, and yet, these banks don't want to participate.
So this is a way to effectively have a private transaction or private contract that is fully protected, and private, tax free, and is one where you're not going to lose the money that you might have in an account. Now, we also mentioned the Dodd-Frank Act. The Dodd-Frank Act was passed in response to the prior bail-in in 2007, 2008, where there were large financial institutions that became insolvent with the mortgage crisis, there were a lot of bad loans made on real estate to folks who really couldn't afford the real estate. And then this massive foreclosure bubble and wave came up on the banks and some became insolvent.
And so what happened was a bail-in, meaning they took taxpayer dollars, and they bailed out private corporations to make them solvent. And obviously, taxpayers were not okay with that and raised stink and awareness about it. And so in response, they passed what's called the Dodd-Frank Consumer Protection Act, but it does anything but protect consumers. What it effectively does is it takes your deposits that you make into Wells Fargo or Bank of America Chase, and it becomes the bank's funds, and your statement is really an IOU. And in the event that Wells Fargo becomes insolvent, or there's a bank run, or hyperinflation occurs and people try to take all their cash out, and they become insolvent, or there's another mortgage crisis from bad loans.
The money that you've deposited is, effectively, their money, and they're going to offer you pennies on the dollar, or perhaps stock in the company, in an exchange of value for whatever cash you had deposited. Now, I don't want that. You don’t want that. And none of your audience wants that. But people and when I first started digging into this, I thought this is simply unAmerican, it's unconstitutional. But when you dig into this, you'll find that that is absolutely the conclusion. And that it's really easy to protect yourself from a bail-in, and audience and listeners can Google that what is a bail in, and you'll be able to go down a rabbit hole that there will take you into places like Cyprus, where depositors money was taken in 2012 2013 when banks became insolvent there. You’ll go, that doesn't have anything to do with us here across the pond. But it does, because Dodd-Frank was passed. And all of the European Union also has bail in laws in their centralized banks. So that's the risk that most people are not aware of, especially high net worth folks, Dr. Loo, where they just aren't aware that keeping $5 million in Wells Fargo is a huge risk that you don't have to take.
Christopher H. Loo, MD-PhD: Yeah, yeah. And you've point out so many things, because with so many of the geopolitical events happening, with the Canadian truckers, and then the government shutting down the bank accounts for the people that sent them aid and with the United States, sanctioning Russia essentially crumbling the ruble, and so to the audience, these things are very important privacy, and you don't want to keep too much money in the bank because again, they can confiscate your wealth, they can freeze your access, so your money in the bank is not your money. So these are very important. So, my next question is what's really interesting is, private banking is so important today, we need to have privacy and secrecy, we need to be able to do our things and have access. So do these strategies deal with physical assets? Or is it just strictly paper in digital assets?
Seth Hicks, Esq: Well, we're talking about, you pay fiat currency cash in for premiums, and that it has a cash value in your policy, and there's an annual ability to put more cash into your policies, in effect, if in effect until you die. And that is one of the things that is, this is a banking strategy, whereby you're taking a banking equation back into your own life. And I like to create a picture for folks.
Think of it like you're a private vault, and in your private vault, you have the ability to access your funds, you have the ability to use your funds, but, it's like a bulletproof vault, where it's in private, and asset protected, it's tax free, when you take money out, or you put money in, there is no tax event. And that is pursuant to internal revenue code 7702. And so if the audience wants to look up IRC 7702, you can see that within the context of a whole life insurance policy, the ins and outs of your cash will not have any taxable event. And so that means if you've stored up, let's say, $5 million in cash value, and you're your retirement age, and you want to start taking distributions every month, those distributions, unlike an IRA, and unlike other types of government sponsored plans, are totally tax free. And they're tax free in and they're tax free out. So when that light bulb goes on, you'll recognize there's really no reason to put money into government sponsored retirement accounts, 401Ks, IRAs, because in the long run, the tax free growth far outweighs and outperforms those other taxable structures.
Christopher H. Loo, MD-PhD: Oh, so yeah, yeah. So that may, then basically, there's no need to use these traditional ways, because it's just so much more favorable to use these private banking strategies.
Seth Hicks, Esq: Yeah. And we've got spreadsheets where we compare, one into an IRA or a 401K, and then one into a high cash value private banking policy, and look at the performance at times. And whether you pay tax now or later, the government's going to get their tax on what you've got in their sponsored program and structure. And think about this. I mean, with the printing of money that's been going on in the last decade, two decades. We're over $30 trillion in debt. Now, two years ago, that was 26. So $4 trillion, in just a short amount of time, you can see the parabolic printing of money, and what effect that will have is that it's, I believe that it will directly impact taxation.
And you're going to see increased taxation on people who have wealth. Yeah, I mean, you can't tax the poor when they don't have anything. So the rich are going to bear the burden. And their children are going to bear the burden, the estate tax issues, which occur from high net worth individuals, when they transfer wealth from generation to generation. The government likes to swoop in and take their share of that. Whereas with private banking, there's no tax burden at all. When you transfer from one generation to the next. It's a tax free transfer to the heirs. So the death benefit that comes when Grandpa dies, and there's $10 million dollars in death benefit that flows to his son or to his grandchildren. There's no taxable event there.
Versus paying if you have a high enough net worth paying 50% of that, and I like to tell a story which most people understand and as easily verifiable, and that's with regards to the artist, formerly known as Prince is. Do you know who he is?
Christopher H. Loo, MD-PhD: He's a very famous rock star singer. I think in the 80s or 90s. I believe he died of an overdose. But we'll go ahead. I'll give you an example.
Seth Hicks, Esq: Yeah, he's a famous, famous pop rock star. And he died of some type of medical, pharmaceutical overdose. Exactly. It might have been fentanyl. I'm not, I don't quite recall. But what I do recall is that when he died, he had amassed about $200 million and, and total estate value. And he had no private banking in place, he had no other structures to help alleviate the tax burden. And the state of Minnesota and the federal government took over $100 million from his heirs and beneficiaries of his estate. And they were left with less than half. Whereas if that money would have been structured properly, they wouldn't have lost $1 Or a penny. And I mean, I bet your listeners feel like I do when we've made money. We want to pay as little tax as legally possible. And we want to keep what we make, whether it's where I get to use it, or whether it's my heirs and beneficiaries get to use it. We don't, I don't want to sponsor government taxation, you know.
Christopher H. Loo, MD-PhD: Especially when we had to bail out the big banks from 2008. And then also from the Coronavirus pandemic, when the government just printed out trillions and trillions of stimulus and caused this massive inflation that we're seeing. And I'm all for paying your fair share. But if it's not, if it's being wasted and being misspent, it's in your best interest to keep paying as little taxes as possible.
Seth Hicks, Esq: Absolutely. There was in the presidential debates between Trump and Hillary Clinton, many may remember she pointed out that, well, he doesn't even pay taxes. And his answer was, I'm smart. I'm smart, I take advantage of the laws that are available to me. And I utilize those laws to the best of my abilities. And that's why they don't pay taxes and people like John F. Kennedy, Walt Disney, you name it. I mean, Ray Kroc, from McDonald's franchise all have utilized private banking strategies, owner of JC Penney's, I mean, the list goes on and on from famous presidents and wealthy politicians, even now, they they utilize this strategy, because it has such tremendous value, and especially with regards to asset protection, and Tax Freedom, and financial privacy, that's why they use it.
Christopher H. Loo, MD-PhD: Yeah, it's so interesting, because if you look at, for example, individuals such as Jeff Bezos, and their portion of the taxes that they pay relative to their wealth is much less, and that's because they understand the tax laws. And so you know a lot of these CEOs and billionaires, they have very little earned income, and they take a lot of their income from equity and stock. So if you understand these types of strategies you can really increase your wealth and pay less. So, such a fascinating conversation. I know a lot of people are interested in contacting you and, or finding more about you. So how can they do that?
Seth Hicks, Esq: Our website is privatebankingstrategies.com. And on that website, we've got a book that we make available to folks who want to learn more about us, and you simply can access the book via audio or written book, your choice, if some like to read and some like, listen, it's available to you right there on the website. And then we also have numerous blog articles, and we have podcasts that we've produced that dive into deep dives on various aspects of the pillars, how it works, how you operate your bank, and people oftentimes when this starts to resonate with them, they begin to binge on the content.
But if you have an interest in learning about your particular state. Like I said, Texas, Florida and most of the southern states have an absolute asset, a protected vault for private banking, private family banking, so, but if you want to learn more about your particular state email info[at]privatebankingstrategies.com. And then we'll send you a 50 state worksheet where you can look at your particular state. I'm sure your audience is growing and expanding beyond the state borders of Texas, but the good news is that all of our Texas and southern listeners have absolute asset protection and these private banks.
Christopher H. Loo, MD-PhD: Awesome, awesome. And for the listeners on the show, all of Seth's resources will be listed in the show notes. So, Seth, any final parting words of wisdom before we call it a day?
Seth Hicks, Esq: I would absolutely drill down into this concept if you've never heard of it. And take a look at some of the resources which we've developed over the years, especially those folks who are operating in your craft, you're doing what you went to school to do. And we have a number of high net worth Doctor clientele which they run in their lane, but they're looking for strategies to diversify. They're looking for an exit strategy so that they don't practice medicine their entire life. They want to get into franchises, they want to get into investment real estate, they want to do oil and gas. And there's just various other ways to diversify their portfolio and have passive income streams. And they can do it all through their private bank, they don't have to go out and find financing through third parties, we create the structures for them. And it works really well. When you can put all these pieces together and the light bulb comes on. That's why we made those resources available for folks.
Christopher H. Loo, MD-PhD: Awesome, awesome. So thanks so much for a fantastic conversation. I know the listeners will get a lot of value out of it and we look forward to having you again as a guest on the podcast.
Seth Hicks, Esq: My pleasure, anytime
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor's note: This transcript has been edited for brevity and clarity.