Special Interview: Wall Street’s Dirty Little Secret

Read the full interview transcript below.

Interview Transcript

Jerry Robinson, host: Joining us today is Barry James Dyke. You’ve heard him here on the program before. Barry is the author of a brand new book, “Guaranteed Income: A Risk Free Guide To Retirement”. Barry, it’s great to have you back on the program. Thanks for joining us.

Barry James Dyke: Thanks so much for having me. I always admire what you’re doing, and it’s always an honor to be your guest. Thank you.

JR: Absolutely. As you may know, Barry James Dyke is a part of our Christian Advisor Referral. He provides retirement solutions to people in the New England area where he lives. I imagine it’s pretty cold up there this time of year.

BJD: Yes, we have a full blown snowstorm going on today.

JR: Oh, my. Well, we’ll count ourselves lucky down here in the South. Taking a look at your book, “Guaranteed Income”, I’ve got to tell you as I’m looking through the book, that this thing is unbelievably compact for the punch it packs. This is an amazing little book. Chapter one is “The Collapse of the American Pension”, chapter two “New Risks in Retirement: Mutual Funds Are Not Delivering the Solution”. You go through and you talk about not just that, but about the retirement crisis and the fact that the whole pension system has gone away and now employees are on their own to defend themselves from the sharks on Wall Street. But on top of that, you go into and explain, and I think this is the best part and will blow most people’s minds, how the guys that concoct this stuff, the guys that actually force this stuff on the American population, that they do not eat their own cooking. Tell us what you discovered in this book.

BJD: Well, it was a real blessing to get to research for a number of years, 10 to 15 years. The folks that make billions speculating with your money, the biggest asset managers, the JP Morgans, the Banks of America, the Wells Fargo, all of these huge institutions, and even the Federal Reserve are part of this scam. They all use the guaranteed product which I recommend in this book, so it’s complete and total hypocrisy, Jerry. But, as you know, I like to document things. I’m a doubting Thomas of the first order, so I documented everything. Wells Fargo has, I think, over two trillion dollars in assets under management selling speculative products. If they’re in the market today, Jerry, the market is getting hammered as you know. They make a lot of money on this stuff, but for their own account. They buy boatloads of guaranteed products like life insurance and annuities, so it’s complete hypocrisy.

JR: Chapter 12 of the book is entitled, “Bankers Love Guarantees of Life Insurance Companies”, and it talks about how former Federal Reserve Chairman, Ben Bernanke, plays it safe with annuities, Federal Reserve Chairman, Janet Yellen, pension annuities are her largest family asset. The Federal Reserve 401K Thrift and Savings Plan and other fixed annuities are the biggest asset. Isn’t that something?

BJD: Yes, and God bless you Jerry for speaking the truth because I originally came up with this research in 2009, and I did a press release on this. The only one who picked it up was a paper in London, “The International Business Times”. No one in this country would pick it up, and it’s all true, as you know, in the book. People can go to my website www.barryjamesdyke.com and get the book. I don’t have it on Amazon yet. As you can see in the book, I actually took the Deloitte Audit and put it into the book when I found it, because I knew it was going to be invaluable for consumers. But it’s all true.

JR: That’s absolutely amazing. Again, this book is just filled with that kind of information. By the way, I want to talk to you about something real quickly while we have you on the air, Barry. We had talked off the air about the upcoming conference we’re going to be doing in Estes Park, Colorado, and you were able to confirm that it was something that you want to do.

BJD: Yes, I want to do that. It will be nice to be in Colorado, with the quality people that you have and with you and your integrity. Yes, I definitely want to do that.

JR: We look forward to having you there as an addition. That’s going to be wonderful. He’ll be there talking about much of the stuff that you hear about in this interview. Let’s talk real quickly about insurance and annuities because, in the mainstream press, and as you’re documenting in this book, annuities and life insurances are heavily used by those same people who market to the end user. They market things like mutual funds. I think you’ve documented $17 trillion in the mutual fund industry at least. All that money is assets under management. It’s a lucrative scheme that has been foisted upon the American people. I’m not saying that there’s not a place for it. I want to certainly speak to the mutual fund advisors in our audience, not to say that mutual funds themselves are necessarily terrible things. It’s just that there seems to be a great imbalance today in the type of financial education that most people receive, and, Barry, you’re filling that gap with books like this.

BJD: Thank you. It’s the truth. There is one thing, Jerry, that is not in my book and would be good for your listeners to know. I just got back from Las Vegas. I spoke in Las Vegas last week on this very issue at a conference. One of biggest sellers of fixed annuities in the country is Fidelity Investments. Fidelity has a full page article today in the Wall Street Journal about why they believe in active management, but Fidelity private planning groups are a huge seller of fixed annuities from major name brand life companies. As a matter of fact, I have white paper to show that Fidelity has actually been doing this for their high-end clients since 2003, what is called a four block strategy. What I’m trying to do, Jerry, is incorporate some of the high-end financial planning, which Fidelity has been doing for their high-end clients since 2003. I actually met the guy who developed the whole program for Fidelity. So, this is the kind of hypocrisy you are seeing. There is another one that I don’t think any of your advisors would be involved with. Have you ever heard of a guy named Ken Fisher?

JR: Sure.

BJD: He’s the guy that hates annuities. I hope all of your audience listens to this. People flipped when I gave out this statistic in Las Vegas. American Equity, which is one of the large publicly traded life companies has good financials, and they have built a really good product. I don’t do any business with them at all, but do you know who a major shareholder of American Equity Life is, Jerry?

JR: Who’s that?

BJD: Fisher Investments. So, this is the thing. Fisher says he hate them, but his own asset firm, if you don’t believe me you can go to Yahoo on the major shareholders tab, and look under Fisher Asset Investments. So, Fisher Investments is actually a major shareholder in a major life company in the United States.

JR: It’s the same thing that you’ve been uncovering. What you’re talking about is something you’ve been researching for a long time. It’s the same thing we see with a lot of the shills. I should be careful with my language when I use the word “shills”. I don’t want to call them shills necessarily. There’s a lot of financial education that’s passed off as financial education by people who have real white teeth, real shiny smiles, and they pass off this information that almost sounds like it’s being robotically delivered by a bank. It basically tells them to put all of their money into the banking system. You see this with people like David Ramsey and Suze Orman. These folks tend to preach a mantra that really benefits the mutual fund companies, don’t they?

BJD: Yes, and this is the whole thing. No question about it, Jerry, David Ramsey knows personal debt, corporate debt, and the country’s debt is a huge problem. I couldn’t agree with him more about that. But, in terms of his telling people they can get 12% in the market, it is total lunacy. As you know, in my new book that you can get by going to www.barryjamesdyke.com, the largest sovereign pension funds in the United States get a rate of return on $300 billion in assets of one percent. But, they have an assumed rate, Jerry, of about seven and a half percent. The largest institutional investor in America, which is Calpers, only gets one percent while projecting seven and a half percent. Actually, the largest sovereign in the world in Japan, over a ten year period, has only gotten 1.7%. The Norwegian company, over a 15 year period, got about 3.17%. The whole idea is that even these biggest institutions can’t make money in the market. It’s a fallacy.

JR: Well, we’re certainly seeing a lot of fear in the market, and that drives demand for safer assets like life insurance and annuities. Let’s talk about that for a moment in conclusion because I think that’s really the Catch 22 here for many people. They have heard for so long that annuities and life insurances are these evil products that you should avoid at all cost, and people that have listened to our “Five Levels of Financial Freedom” or who have read our book know that we view every single financial product as a tool. It’s simply a tool and nothing more or nothing less. There’s no really good tool and no really bad tool. It all depends upon what you want to achieve. It seems, based on the retirement pension crisis, there is a tremendous need for guaranteed income, which is the title of your book, and that’s exactly what you’re documenting in this book. Many of the top people like Bernanke and Janet Yellen, as well as others, are relying upon, for their own family’s wealth, things like annuities which are maligned by the banks and the corporately controlled media. I that what I’m understanding you to say?

BJD: You nailed it, Jerry, one hundred percent. One of the great things, if you’ve seen the research in my book, is that I discovered how major corporations are lowering risk using these things.

JR: Yes. Talk to us about that.

BJD: What I’ve discovered is that the major corporations like General Motors, Verizon, Bell Systems of Canada, British Airways, Bristol Myers Squibb, Motorola, Panasonic, and all these other major corporations, and it’s even bigger in the United Kingdom, are saying they can’t manage these pension benefits anymore. They can’t even manage their own retirements, and they’re throwing in the towel, and buying monster annuities.

JR: So, they’re basically outsourcing the risks to the best risk managers in the world.

BJD: Exactly, and I think the classic case is General Motors. You and I had to bail General Motors, and this is a matter of fact. In 2012, General Motors purchased $29 billion worth of annuities to offload their pension risk for their salaried population, covering 110 thousand employees. Do you know who placed the annuity? Do you know who was the broker? Morgan Stanley.

JR: Oh, my!

BJD: I wouldn’t say this unless I knew it was true. Morgan Stanley, which makes millions from speculating with your money, was actually the broker for placing the $29 billion annuity to offload General Motors pension risk. This is also true of Verizon. Verizon did it for $8 billion. It’s amazing some of the bigger ones, the name brands, CRW, Motorola, MI Music, NCR, Church of England.

JR: Barry, I really like how you included also the target date funds in this book, because that was some important research that you had done. By the way, you’re listening to the voice of Barry James Dyke. He’s the author of a brand new book, “Guaranteed Income: A Risk Free Guide To Retirement”. He’s also written a couple of excellent books entitled “The Pirates of Manhattan” and then there was a sequel, wasn’t there, “The Pirates of Manhattan, II”? Both of those book was very eye-opening as well, documenting much of what Barry is talking about here. But, you also listed they target date funds in the new book, and I’m really glad you did because those, as we well know and as you have been preaching, are becoming extremely popular and are dangerous. Tell us why they’re dangerous.

BJD: Jerry, Jack Bogle, the founder of Vanguard, endorsed the book. He liked what I was doing. He said this book is rich in passion and detail.

JR: Wow! Congratulations. So you have a testimonial from Bogle. That’s wonderful.

BJD: He’s a very honest and wonderful guy. Vanguard, you know, they are the biggest asset manager now in the United States, and they took in $256 billion in new assets. They have the low cost index model. But, the problem with them is, and I know this for a fact, is they are a big sponsor of the target date funds. I was doing work for the manager of a major public company, and Vanguard is a trustee and the custodian of their compensation plan, and part of what they disclosed was the institutional track record of the target date funds, the entire list of all of Vanguard’s funds. Do you realize that as of September, every single target date fund that Vanguard has, every single one of them has lost money, Jerry, since inception?

JR: Barry, what do you tell people who have 401Ks because they really are trapped, if they don’t have the brokeragelink? I know you can’t give specific advice, but what’s your general advice to people with 401Ks that have money in it and are still working, and they don’t have the ability to pull it out?

BJD: I guess it was just a savings vehicle, just to take advantage of the savings component, Jerry. I’m not against indexing, and I’m not against the market, but I would prefer them to have some type of low cost index fund. The target date funds, which have been the main focus of funds in the United States, have performed horribly. So, I just tell people, Jerry, that they can put money into a money market account where, hopefully, they have a guaranteed account of some sort, or some sort of low cost multi asset class index fund. I’m not a big believer in active management anymore. Some people can do it, but for most people, I just don’t believe in it at all.

JR: I think it’s a dying model. I think you’re right, and the robo-advisors are taking over, too. That’s been a big, big topic as well.

BJD: Yes, and the problem with the robo-advisors is that’s just another scam. That’s just another part of Silicon Valley’s scam, the latest thing from Silicon Valley.

JR: So, basically, they’re sharing revenues. They’re tech buddies. Barry, both you and I saw this 2008 financial crisis coming. It was on the wall, and you and I met shortly thereafter, right in the wake of that 2008 crash. Do you sense another one coming? As you look out and see the debt accumulating, the fear mounting, the economic numbers coming in, the commodities prices being smashed, central banks in disarray, the banking sector of Europe in shambles, and this one in particular also getting blasted here in the United States, what’s your sense about the global economy right now, and how sensitive are you feeling that maybe we are on the cusp of something big here?

BJD: Well, let’s look at the facts. The equity exposure, Morning Star did an analysis, they found the equity exposure for individual consumers, your listeners, is higher in 2016 than it was in 1999, and it’s higher than it was in 2006 and 2007. We all know what happened after that, Jerry. Let’s look at another fact. Let’s look at the participation rate. The actual participation rate, even though the markets have been at all time highs, the actual individual investors as a whole are staying out of the market. Let’s look at another statistic. Margin debt, and you’re very familiar with this, Wall Street borrowing money for stock purchases is at an all time high. Generally, very high margin debt is a sign prior to a crisis or meltdown. So, that’s another problem. We’ve got the entitlement problems, as we know. In the financial engineering, Jerry, it’s criminal, the stock buybacks. Apple, the stock everyone loves to own, has around $87 billion worth of buybacks on their stocks at a higher price than the stock is worth. So, it’s financial engineering, and they’ve actually lost $15 billion. Another sign of financial engineering is the huge amount of borrowing to fund debt funded dividends, primarily in the private equity industry, but also people like Apple, so they’re actually borrowing money to fund dividends. So, it’s just crazy. Instead of returning value through the shareholders, it’s being contributed through financial engineering.

JR: Your clients are protected from such a downturn. Is that true, and how?

BJD: Well, this is the thing. Using life insurance and annuity products, as you know, is a contractual guarantee. It’s a promise to pay. With mutual funds and stocks, all the risks are dumped on the consumers, but if I put my money into a life company, the insurance company absorbs all the risk. They absorb the interest rate risk, principal risk, and so forth. Interest rates have been low, but at least people have their principal protected. So, today, I’m going back to the old Will Rogers saying which he said in the 1930s about why he had so much life insurance and annuities. Will Rogers said, “I am more concerned about the return of my money than the return on my money.” So, when you see what Will Rogers said roughly 80 years ago, this is more important for consumers today.

JR: Right. That makes sense. The voice you’re listening to is Barry James Dyke. The book is “Guaranteed Income”. Go to his website, www.barryjamesdyke.com and pick up a copy of this book. Barry, thank you so much for joining us today. It’s a great pleasure to have you back on.

BJD: Thanks so much, Jerry. God bless.

Featured image courtesy of: Robert Crum / Shutterstock

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