OUR STORY: LONG LASTING WEALTH & FINANCIAL INDEPENDENCE
In 2010, Brian Engel, a professional pilot and Barry Dyke, a wealth advisor and best-selling author met over lunch at a diner in Hampton, New Hampshire. It was a meeting of like minds. Both men were interested in creative and innovative ways to build long lasting wealth and financial independence not tied to the runaway Wall Street casino.
Brian, a graduate of the U.S. Naval Academy and an engineer by training, flew AV-8B Harriers for the Marine Corp. Through extensive research and mathematical analysis, Brian concluded the complex savings plans sold to him such as IRAs, mutual funds and 401(k) s since his early days as a fighter pilot were fragile, opaque and prone to failure. Despite the media narrative, academic and institutional hype that expressed how great these complex savings plans were, Brian knew these plans, stuffed with equities; junk bonds and derivatives were risky gambles. Worse still, these plans, offered no protection of principal for savers like himself.
Barry, who is nationally known for his extensive research in corrupt Wall Street finance and the mutual fund industry, had come to similar conclusions as Brian. In his best-selling book, The Pirates of Manhattan Barry documented the ocean of corruption in the mutual fund industry that manages the nation’s 401(k) savings plans. In his second book, The Pirates of Manhattan II: Highway to Serfdom Barry analyzes how target-date mutual funds, a pre-packaged bundle of mutual funds, which virtually no one understands and offers no guarantees, had become the core savings strategy in corporate 401(k) retirement plans.
Brian and Barry both agreed that the 401(k) and similar retirement savings strategies, flooded with mutual funds stuffed with speculative securities, had become a major component of one the greatest systematic wealth transfers in U.S. history.
Guaranteed retirement pensions for pilots and regular Americans have been replaced by 401(k)s stuffed with risky mutual funds that guarantee nothing. Precious hard-earned savings were being gambled with, and were treated as cannon fodder for the Wall Street casino.
CASE STUDY ONE: In early 2019, a recently retired pilot who flew 737s and helicopters in the Navy came into our offices with his wife. His wife was a structural engineer with a major aerospace manufacturer in Southern California. The couple lived there for more than 15 years before moving back to the East Coast.
Both the pilot and his wife had been shellacked in previous market meltdowns, in the 1999-2000 dot.com meltdown, and in 2007 and 2008. Trying to time the market, they suffered hundreds of thousands in stock market losses. After retaining us and studying our proprietary research on how banks, major corporations and how insiders invest, plan, position and guarantee their retirement plans, we completed a thorough financial plan and cash flow analysis for them. The couple invested seven figures with us in 2019 and will be doing similar investing with us in 2021 and beyond.
THE AIRLINE INDUSTRY: TURBULENT SKIES AHEAD
Now more than ever, as a professional pilot you are on your own when it comes to your financial well-being.
Pension and guaranteed retirement benefits for professional pilots have been frequently changed, frozen or terminated. Long-term retirement obligations by airlines have been persistently mismanaged and underfunded. Airlines often end up in bankruptcy. Pension obligations are often dumped on the Pension Benefit Guarantee Corp (PBGC), the government insurer of pension plans, yet the PBGC is a financial quagmire onto itself.
Pensions for pilots still exist, but their long-term viability is at risk. Since pension obligations are a long-term liability or debt on the corporate balance sheet, C-suite airline executives favor getting rid of pensions since they can dramatically hinder and affect short-term stock-based compensation.
While wages have declined for most workers, executive compensation for corporate America and airline executives has skyrocketed. In 2019, the Economic Policy Institute (EPI), a Washington, D.C., a nonpartisan think tank, found that CEO compensation, since 1978 has increased 940%. During the same period, the typical worker compensation has only increased by 12% in inflation adjusted terms.