Kai is one of the founders of True Link Financial. True Link Financial protects seniors from becoming victims of fraud, identity theft, and scams by providing financial tools for olders adults and their families.
RFZ: Can you tell us a little background about how you decided to start True Link Financial??
Kai: I was a startup guy out here in California and meanwhile my mom was going through hell trying to take care of my grandma. As my grandma started to lose her memory it was impossible for my mom to maintain her quality of life and independence and still safeguard her finances. I was surprised banks didn’t routinely services for this population.
So we did the founder diligence – is it a solvable problem, and are there enough people like my mom and grandma that if we solve it we’ll be able to build a real business around it. We answered yes to both and decided to go for it.
RFZ: What was your very first start-up and how did becoming a first time entrepreneur affect your personal finances?
Kai: It was a nonprofit called the Roosevelt Institution which later (confusingly) merged with an organization called the Roosevelt Institute. At startup you endure some lean months with the hope of future wealth; at a startup nonprofit you hope to earn yourself a wealth of good feelings. I was fortunate that my parents were supportive of what I was doing and I knew I’d never be hungry, but living in Palo Alto on $1100 a month is tough for anyone even if they aren’t putting plane tickets on their personal credit card. I couldn’t afford an apartment and would cut corners on healthcare and food. Maybe someday I’ll be successful enough that I can write openly about how bad it was but honestly it got pretty bad.
RFZ:: Did you do any odd jobs to make extra cash on the side while starting True Link Financial?
Kai: Nope. Just kind of held my breath and hoped for the best.
RFZ: Identity theft has been a growing concern. What actions should you take if you’ve become a victim?
Kai: There are two types of fraud that are very different. In the first case one in which a person fraudulently persuades you to give them your money, and the other in which a person fraudulently persuades a financial institution to let them spend your money.
Both are bad, but from the perspective of the law, in the first case – e.g. you got conned into making an investment in a company that turns out not to exist – it’s your problem. In the second one – someone forging checks on your account, opening a credit card in your name, hacking into your bank account, using your credit card number without authorization – the financial institution is responsible. If you didn’t authorize it, the bank made an error in sending the money. (It might seem a little unfair that someone forges a check on your bank account and the bank is out ten thousand dollars… until you think about it and realize the bank’s one job is authorizing payments on your behalf.)
Banks will shirk on their responsibilities here. They will make it a huge pain in the neck to get your money back. But ultimately they’re on the hook for it. So: take a deep breath because it’s going to ruin your month, sign up for CreditKarma and BillGuard for free to keep an eye on things, submit a police report, and then call the financial institutions in question and tell them you didn’t authorize the charges.
In summary, the lesson we’ve learned is, identity theft is a pain in the neck, but authorizing the wrong transactions can ruin you. Make sure you understand what you’re investing in, what powers a power of attorney confers, who your investment advisor is, and don’t sign over the title of your house or other property unless you mean it.
RFZ: What are some things that many of us can do immediately to safeguard our finances?
Kai: The first piece of advice: have a second set of eyes on the road. In my case I have a cofounder and a board that makes sure the financial decisions I’m making are wise. The point is not that we vote about stuff – we’ve actually never had a decision that isn’t unanimous – but that I’ll think about things more carefully if I know I have to explain them to someone, and that in the process I might get a different perspective or someone might notice something I hadn’t.
So don’t be macho about it. Suppose you’re so badass you’re right 99.9% of the time. You probably make fifty financial decisions over the course of your life that could ruin you – considering a major investment, moving homes, powers of attorney, that kind of stuff. So you’re at 95% odds of avoiding financial ruin. More likely than dying of breast, cervical, prostate, testicular, or colorectal cancer put together and look what people will go through to avoid that! If you bring in a spouse or other family member on those fifty decisions who is independently right 99.9% of the time, your odds of financial ruin go down to 0.005%. And let me say this – nobody is right 99.9% of the time. In fact, studies show that people who think they are unlikely to be defrauded are actually more likely to be defrauded.
What you want is a system that fails safe – that when you make a mistake, the results are not disastrous because there is a second backup safety system in place. There is no better second system than the human intelligence of a second person.
Other piece of advice. National Consumer League operates a fraud hotline, and the guys that answer the phone tell me that basically their entire job is someone calls and says they’ve been defrauded. The answer is always yes. What can I do about it? Nothing, the money is gone. Basically, if you think you’re being defrauded, you’re definitely being defrauded. So second piece of advice: if you have any doubts, don’t do it. There are a lot more guys that lose their money making esoteric investments than ones that make a fortune on a stock tip they saw an ad for online.
RFZ: Lastly but not least, give us your two biggest money saving tips you’ve learned while becoming an entrepreneur.
One, always pay parking tickets on time, even if you have to borrow money from a friend. It’s easy to lose track of but they increase the charges really quickly if you’re slow to pay. Two, there are a lot of places you can add an all-you-can-eat salad bar to a meal for an extra couple bucks. Do it!