People call me harsh.
I have heard it from the stage in front of 400 people. I have heard it at kitchen tables. I have heard it from clients who agreed with everything else I said and then flinched when I described how our family banking system actually operates.
I understand why. The rules are strict. The rate does not move. The one-thrike rule costs you access for life. And when each of our children is old enough to enter the system, the conversation about their options is delivered not by my wife and me but by our family attorney.
Here is what those rules have produced: 18 years of operation, zero defaults, and four children who understand money better than most adults twice their age. The rules are not harsh. They are what make the system work.
This post explains the rules, why each one exists, and what happens when you run a family banking system the way a business runs, with real consequences and real accountability.
The Rate Does Not Move. That Is the Point.
Every loan inside our family banking system carries a 10% interest rate. The amortisation schedule is flexible. The repayment timeframe is flexible. The rate is not.
I got that number from Nelson Nash directly. Early in our mentorship, I asked him what rate he applied to policy loans inside his own family system. He said 10%. I did not ask why. He was my mentor. I said done, and we have never moved from it.
The rate is not the point of the system. What the rate does is structural. When our carrier charges 6% simple interest on a policy loan and our internal schedule runs at 10%, the loan balance with the carrier is paid off before the schedule ends. On a 60-month schedule, that might happen at month 52. The remaining 8 payments go back into the system as additional premium. Every dollar above the carrier’s rate is premium in disguise. The higher rate accelerates the system.
But there is a second reason the rate does not move, and it matters more than the mechanics. The moment the rate moves for one family member, the system stops being a system. It becomes a series of accommodations. A family member who asks for a lower rate is asking whether the rules apply to them. They do. They apply to my wife. They apply to me. They apply to every one of our four children. The rate is the same for everyone, or it means nothing.
Key Note
A family banking system with negotiable rules is not a system. It is a favour account. The 10% rate is not punitive. It is the mechanism that keeps the pool growing and the discipline real. When the rate holds for everyone without exception, the system holds for everyone without exception.
One Strike. That Is the Default Rule.
If a family member borrows from the system and does not repay, they lose access for life. Not for a year. Not until things improve. For life. They can finance their needs at someone else’s institution. They will not finance them here.
That rule has never had to be enforced. In 18 years of operation, we have had zero defaults. Not because everyone is perfect. Because the rule produces the behaviour before the situation arises. Family members build their schedules carefully because they know the consequences. They communicate early when life gets complicated because they know the alternative.
The companion to the one-strike rule is proactive communication. If a family member knows a job loss is coming, a medical leave is starting, or cash flow is about to tighten, they come to the system before the missed payment, not after. They bring the schedule. They explain the situation. We restructure. We capitalise a few payments to the back end. We reduce the monthly amount for a period. The system accommodates the conversation because the conversation happened.
What the system does not accommodate is silence. A family member who knew the setback was coming and said nothing has violated the trust the system runs on. The one-strike rule exists precisely for that situation. There is no second meeting. The relationship with the system is over.
The Principle
The one-strike rule does not punish hardship. It rewards honesty. Every family member who has ever come to the system with a problem before it became a default has been met with flexibility. The rule does not enforce perfection. It enforces communication.
Remove the Friction and the Defaults Disappear
Every repayment in our family banking system happens by automatic debit. The schedule is built before the loan is approved. The debit is set up before the schedule begins. The capacity to repay is confirmed before a dollar leaves the system.
Defaults seldom begin with a decision not to pay. They begin with a missed payment that felt manageable, then a second one, then a balance that has grown past the point where catching up feels possible. Automatic debit removes the moment when the first missed payment happens. The payment goes out on the day it is due, whether the borrower thought about it or not.
That is not a lack of trust. It is a structural decision that protects everyone in the system, including the borrower. Zero defaults in 18 years is not a character achievement. It is a systems design achievement.
The Attorney Has the Conversation. Not the Parent.
When each of our children is old enough to own their own policies, our family attorney sits down with them. Not my wife and me. The attorney. She has been with our family long enough that our children have known her their entire lives.
She walks each child through two options. The same conversation, the same script, every time.
Option A: participate in the family banking system. Finance everything through the family pool at 10%. Repay on a schedule you build. Honour the family constitution. In exchange, be included in the Lowe family trust. Provided you follow the constitution, you and your heirs will never have a bad financial day for the rest of your lives.
Option B: finance through outside institutions. Borrow from someone else’s bank. The rate may be lower. The terms may feel friendlier. If that is the choice, the policies owned on your life transfer to charitable organisations of our choosing. You are not included in the trust.
She closes the same way every time. Take all the time you need to decide which option is best for you, and let me know how you plan to proceed.
Why does the attorney deliver this and not the parent
The moment a parent delivers that conversation, it becomes a negotiation about the relationship. The child hears: ” My parents are trying to control me. The friction is emotional and it is unproductive.
When the attorney delivers it, the conversation is about the rules of a separate institution. The parent is not the institution. The child can ask questions, take time, and return with a decision. The choice is genuine. A choice that is not genuine cannot be honoured.
We are not our children’s friends inside the family banking system. We are not their coddlers. This is a business. It is treated as one. That is not harsh. That is the structure that makes the relationship sustainable across generations.
18 Years of Rules, Zero Defaults, Four Children Who Get It
My oldest son took his first policy loan at nine years old. He has never known another system. My oldest daughter actively borrows from and repays the system. My twin daughters are fourteen and are entering that phase of their lives now.
None of our four children have ever walked into a bank to finance something. When they mention how their family handles money to their peers, the response is usually a blank stare. That is changing. Slowly. But it is changing.
The rules sound severe the first time you read them. They are what produced two decades of operation without a single default and four children who understand the banking function, the repayment discipline, and the difference between a system that builds and an institution that extracts.
The rules are not what make the system strict. They are what make the system work.
Want to Know What Rules Would Work for Your Family?
Book a family banking strategy conversation with an Ascendant Financial advisor. We will walk you through how a family banking system is governed, what rules produce the outcomes you are looking for, and what the first step looks like for your specific family situation. No pressure. No obligation. Just clarity.
Frequently Asked Questions
Why use a 10% rate when the carrier charges less?
The family rate operates separately from the carrier’s policy loan rate. When the family rate is higher, the repayment schedule pays off the carrier’s loan balance before the schedule ends. The remaining payments go back into the system as additional premium. Every dollar above the carrier’s rate strengthens the pool. Nelson Nash described this on page 58 of Becoming Your Own Banker — the interest above the carrier’s rate is not really interest. It is an additional premium adding to the cost basis of the policy. The 10% rate accelerates the system while holding the discipline constant.
Has the one-strike rule ever had to be enforced?
No. In 18 years of operation, we have had zero defaults. The rule has never had to be enforced because the rule’s existence produces the behaviour it was designed to produce. Family members build careful schedules, communicate proactively when life gets complicated, and treat the system as the real financial obligation it is. A rule that is known and believed does not need to be applied. It just works.
What happens if a family member loses their job mid-loan?
If they communicate before the missed payment, the system works with them. Payments can be capitalised to the back end of the schedule. The monthly amount can be reduced for a period. The timeline can be restructured. The accommodation is available because the conversation happened before the problem became a default. What the system cannot accommodate is discovering the situation after the fact. Proactive communication is the only thing that activates flexibility.
Why does the attorney deliver the two-option conversation instead of the parents?
Because the moment a parent delivers it, the child hears a conversation about the relationship rather than a conversation about the institution. The attorney presents the rules of a separate entity, the trust, and the family banking system, without the emotional weight of the parent-child relationship sitting in the middle of a business decision. The child can engage with the options on their own terms, take time to decide, and return with a genuine choice. A choice that is not genuine cannot be honoured long-term.
Is the family banking system designed to replace traditional banking entirely?
It is designed to control the financing function inside the household so that capital that would otherwise leave permanently stays inside a system the family controls. Whether it replaces traditional banking entirely depends on the family’s circumstances and how far they build the system. Our family has financed mortgages, vehicles, businesses, weddings, and education through the system for over 18 years. The goal is not to eliminate outside institutions. It is to make them progressively less necessary.
How does Ascendant Financial get paid?
We are licensed insurance brokers. We are compensated by the life insurance company when a policy is placed. The education, the coaching calls, the family banking strategy conversations, and the ongoing support we provide cost nothing separately. We only get paid when a policy genuinely makes sense for someone, and they choose to move forward. There is no charge for the strategy conversation and no obligation at any stage. That is how we have built a community of over 6,500 families across North America.
Conclusion
A family banking system without rules is not a system. It is a pile of goodwill waiting to be tested. The 10% rate, the one-strike rule, the auto-debit, and the attorney conversation — none of those rules exist to be punitive. They exist because a system that bends for one person stops being a system for everyone.
18 years. Zero defaults. Four children who understand the banking function and have never needed to walk into someone else’s institution to finance their lives. That is what the rules produced.
Run it like a business. The relationship survives the rules. What does not survive is their absence.
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