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What Ben Franklin Might Tell a 401k Fiduciary to Say at an Enrollment Meeting

What Ben Franklin Might Tell a 401k Fiduciary to Say at an Enrollment Meeting
August 15
00:04 2017

The following represents a chapter excerpt from the forthcoming book From Cradle to Retirement – The Child IRA – How to start a newborn on the road to a comfortable retirement while still in a cozy cradle (Pandamensional Solutions, Inc., September 2017). If you know of millennials (or baby boomers) who are parents (or grandparents), especially if they own their business or are part of a closely-held/family business, you may want to encourage to pre-order the book through Kickstarter project: “Child IRA Book – Is Your Child’s Future Worth $1,000 a Year.” Professional might want to take a look at and back this project, too, because it offers several low-cost opportunities to brand their business in this large and growing market. 

Who remembers these quotes? “A penny saved is a penny earned.” “Early to bed and early to rise makes a man healthy, wealthy and wise.” “Time is money.” “Never leave until tomorrow that which you can do today.” “God helps those who help themselves.”

Benjamin Franklin was born January 17, 1706 on Milk Street in Boston, Massachusetts. His father, Josiah Franklin made soap and candles. Benjamin was one of fifteen children born to Josiah in his two marriages and was his tenth and last son. His parents couldn’t afford to send him to school, so young Ben’s formal education ended at age ten. After spending a couple of years working for his father, his brother James took him on as an apprentice in his printing company.

Imagine being the youngest son in that era. You got pushed around and everywhere you turned someone was wagging their finger at you saying, “You can do that!” If you wanted to get anywhere you had to be diligent, persistent, and, well, wily creative. Ben demonstrated all that. When his brother James refused to print Ben’s letters in the newspaper he published, Ben figured out a way around this obstacle. He created a make-believe middle-aged widow called “Silence Dogood” (in today’s Facebook era, we’d call this a “Fake Account”) and got his letters published under this pseudonym. You might remember the name “Silence Dogood” as it’s a critical element in the plot of the popular Nicolas Cage movie National Treasure.

Silence Dogood represented the tip of the iceberg in the brothers’ relationship. “Ben and his brother never got along particularly well, and after several years of learning the printing trade, Ben managed to wriggle out of his apprenticeship and set off on his own,” says David S. Rose, author of Angel Investing and The Startup Checklist and CEO of Gust in New York City. “While most apprentices of the time simply became journeymen, and continued working for other people, Franklin, as an entrepreneur, decided at a very young age to set up his own business.

At age 17, Ben ran away to Philadelphia, Pennsylvania and into the history books. Indeed, Dr. Whitfield Bell Jr., at the time executive officer of the American Philosophical Society and well-studied in the lore of Franklin, told the story of a Philadelphia physician who once publicly corrected Oliver Wendell Holmes, immediately after Holmes had just noted Franklin’s was born in Boston, saying that “Franklin was born in Philadelphia at the age of 17.”

But it’s not the precise definition of Ben’s “birth” nor his oft-told life story that concerns us. Rather, it is his death. More precisely, the will he had created that was executed following his passing. “I have been a Frankophile most of my life,” says Jack Towarnicky, Executive Director at Plan Sponsor Council of America in Columbus, Ohio. “I am a sucker for combinations of common sense (cents) and innovation. My GREGORC™ mind style is ‘practical dreamer,’ so, when my brother-in-law Ron Goldwyn and my sister Carol, longtime Philadelphia residents, shared the story of Ben Franklin’s Last Will and Testament, I was immediately hooked.”

Ben Franklin died on April 17, 1790. He left a large estate but a much larger philosophy. Here reads a portion of his last will and testament:

“I have considered that, among artisans, good apprentices are most likely to make good citizens, and, having myself been bred to a manual art, printing, in my native town, and afterwards assisted to set up my business in Philadelphia by kind loans of money from two friends there, which was the foundation of my fortune, and all the utility in life that may be ascribed to me, I wish to be useful even after my death, if possible, in forming and advancing other young men, that may be serviceable to their country in both these towns. To this end, I devote two thousand pounds sterling, of which I give one thousand thereof to the inhabitants of the town of Boston, in Massachusetts, and the other thousand to the inhabitants of the city of Philadelphia, in trust, to and for the uses, intents, and purposes herein after mentioned and declared.”

Franklin then laid out precisely how he wanted the trusts managed. He wanted the money to go to young people who, like himself, sought to begin their lives learning a trade. These loans would charge 5% interest. To be eligible, applicants must be:

“such young married artificers, under the age of twenty-five years, as have served an apprenticeship in the said town, and faithfully fulfilled the duties required in their indentures, so as to obtain a good moral character from at least two respectable citizens, who are willing to become their sureties, in a bond with the applicants, for the repayment of the moneys so lent, with interest, according to the terms hereinafter prescribed.”

“Ben Franklin was the quintessential American entrepreneur,” says Rose. “Unlike all the other Founding Fathers, Franklin viewed himself first and foremost as business person, and fervently believed that public servants should not be paid. In fact, the 2,000 pounds that he left in his will for the establishment of the funds came from his salary as Governor of Pennsylvania. He therefore established the two funds in his will expressly for the purpose of lending start-up funds to young men who had completed their apprenticeship so that they could create their own businesses. The funds were not for education, not for apprenticeship programs, not for scholarships, not for institutions…they were designed to help kickstart entrepreneurial tradesmen like himself!”

Franklin was not merely an advocate of entrepreneurism, he was also one heck of a financier. His will actually calculated the precise growth he expected from the trusts and further instructed the trustees in terms of allocating those assets at the end of the first hundred years and again at the end of a second hundred years upon which the trust would be terminated. These instructions, in the actual words of Ben Franklin, were:

“If this plan is executed, and succeeds as projected without interruption for one hundred years, the sum will then be one hundred and thirty-one thousand pounds; of which I would have the managers of the donation to the town of Boston then lay out, at their discretion, one hundred thousand pounds in public works, which may be judged of most general utility to the inhabitants, such as fortifications, bridges, aqueducts, public buildings, baths, pavements, or whatever may make living in the town more convenient to its people, and render it more agreeable to strangers resorting thither for health or a temporary residence. The remaining thirty-one thousand pounds I would have continued to be let out on interest, in the manner above directed, for another hundred years, as I hope it will have been found that the institution has had a good effect on the conduct of youth, and been of service to many worthy characters and useful citizens. At the end of this second term, if no unfortunate accident has prevented the operation, the sum will be four millions and sixty one thousand pounds sterling, of which I leave one million sixty one thousand pounds to the disposition of the inhabitants of the town of Boston, and three millions to the disposition of the government of the state, not presuming to carry my views farther.”

Now, for those not familiar with late-eighteenth century currency exchange rates on the impact of inflation during the 200+ years since Franklin’s death, those gifts of £1,000 in 1790 would have been worth about $1,000,000 in 1990. Franklin’s calculations, barring “no unfortunate accident has prevented the operation,” indicated each city would have the equivalent of $4,061,000,000 within their trust. That means, even after distributing two-thirds of the trust assets in 1890, the trust would still have grown more than 4,000 times its original value. Talk about the power of compound interest!

Perhaps the most compelling thing about Franklin’s Last Will and Testament isn’t just his confidence in the sanctity of self-made citizens nor his acute financial acumen, but his faith in this new experiment called “The United States of America.” Remember, at the time of his passing, the U.S. Constitution was only three years old. “What’s really brilliant about Ben Franklin’s plan is his confidence that America would survive intact for hundreds of years,” says Towarnicky.

Ben Franklin, ever the analytical thinker, understood the power of compounding, and how time enhances that power. While others around him worried of the new country’s future, Ben was busy devising a way to capitalize on that future. In doing so, he showed us by example how to use the future to our advantage. Did we learn?

Next Week: The True Legacy of Ben Franklin’s Last Will and Testament

Christopher Carosa is a keynote speaker, journalist, and the author of  401(k) Fiduciary Solutions,  Hey! What’s My Number? How to Improve the Odds You Will Retire in Comfort and several other books on innovative retirement solutions, practical business tips, and the history of the wonderful Western New York region. Follow him on Twitter,Facebook, and LinkedIn.

Mr. Carosa is available for keynote speaking engagements, especially in venues located in the Northeast, MidAtantic and Midwestern regions of the United States and in the Toronto region of Canada.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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