This post recounts an email exchange with a credentialed financial advisor.  The content has not been modified but the name has been changed and the credentials eliminated to avoid implying that there is any relation between one advisors opinion and the position that might be taken by the credentialing body.

Stephen,

Thanks for your comments.

Although they do not open a discussion but rather, close the door on dialogue, I am responding in detail.  [As you will likely recognize, Stephen's mind was made up before there was a chance to respond.]

Stephen The Stepford Advisor wrote:

“YouBeTheBank site recommends that individual purchase life insurance policies to accumulate funds which are then used to fund future activities.”

Specifically we recommend that clients purchase permanent cash value life insurance. We recommend further that they choose dividend paying policies from mutual companies. Please, take the time to read further in the blog and you’ll discover that we justify this approach in some detail. Better yet, order copies of Money for Life! How to Thrive in Good Times and Bad by Jeffrey Reeves [that's me] and Becoming Your Own Banker by R. Nelson Nash.  You’ll discover the amazing power of this approach, as many other credentialed advisors have done.

Stephen The Stepford Advisor wrote:

“It fails to mention that the costs of owning the policies will be substantail,(sic)”

There are – of course – costs. Substantial? You might want to define that for yourself first and for your practice second. Many advisors find the approach not only helpful but essential to their practice and do not see the costs as either substantial or burdensome.

There is another aspect of this that you may want to consider. There are many different forms of permanent cash value life insurance available in the marketplace. Some carry a heavy cost burden while others do not. If you don’t know which policy is being used you do not know whether or not the cost is “substantial”. Whole life policies from mutual companies tend to be less costly. Universal lifepolicies tend to be more costly – especially when they are improperly funded.  Term insurance policies tend to be the  most expensive.

Stephen The Stepford Advisor wrote:

“as will the restrictions on the availablity(sic) of cash.”

Again, Stephen, you may not have all of the information you need. My clients can access all of the cash in their policies whenever they want it. There is a bit of a lag – a day or two for processing and mail time – since the request must be made through the insurer. Immediate needs are satisfied with overnight delivery. This is not uncommon for mutual companies that are responsible only to their policy owners and not to shareholders or other outsiders.

Stephen The Stepford Advisor wrote:

“The accumulation of funds should never be done with life insurance as the primary choice.”

My Grandpa told me to “never say never and always avoid always.” Your statement is a shibboleth – an oft repeated mantra that contains no truth but that has been repeated so many times that people assume it must be true. In 1492 the world was thought to be flat.

To a thinking person who truly explores this approach to creating and managing a personal economy, the opposite is true.  Whole ife insurance belongs in the foundation of every personal economy.  That was the opinion of most financial planners prior to the advent of EF Hutton creating UL, A. L. Williams brainwashing amateurs, and Wall Street’s merchants of misinformation misleading America into the  mutual fund swamp beginning in the 1980’s.

For over 150 years, and still today, dividend paying whole life insurance has been and is the single best place to put the money you use as a foundation for your personal economy and wealth building system.

Stephen The Stepford Advisor wrote:

“Individuals who truly fear banks should buy treasury securities instead. There are no costs as a practical matter.”

Nowhere in our blog or our book do we state or imply that you should fear banks. In fact, the practices of Money for Life are based on the banking model. Treasuries, like all investments, are for the limited few who have already established a foundation. In addition, there are always (sorry Grandpa) costs.  Most commonly ignored by Stepford Advisors is lost opportunity cost.

Stephen The Stepford Advisor wrote:

“Yet the fact is, if the bank is insured via FDIC, then for all practical purposes, the initial $100,00 is not at risk.”

True. FDIC insures up to $100,000.00 per account. But, again, we never suggested that money in banks is at risk. Also, are you aware that the 50 state insurance guarantee funds typically insure about $250,000.00 per policy?  Are you aware that no whole life policy holder in the history of the insurance industry in the US has ever lost even one dollar of their guaranteed values? Banks can make no such claim. Mutual funds fail this test.  Stepford Advisors run and hide.

Stephen The Stepford Advisor wrote:

“Almost no one needs that amount of money to fund future plans.”

Of all your comments, Stephen, this is the one that challenges me the least. I’ve been serving clients for over 35 years. During that time every one of those clients encountered a financial need so great that they had to invade their retirement accounts…every one of them. Here are a few situations that demand even larger amounts of secure money.

• Fidelity Funds reports annually on the unfunded medical expense needs of a couple that will retire in that year. In 2007 that was $207,000.00. That’s the out-of-pocket after insurance payments have been made.
• Another fund company (Vanguard, I believe) projects the long term care needs of retiring couples – for 2007 it was $350,000.00.
• One of my best friends has two Down Syndrome children. I expect they’ll continue to need that $100,000.00 almost every year.
• Kyle was injured in a skiing accident and after months in a body cast, two years of physical therapy, and $125,000.00 in debt he is back to work. Seems each of these adds up to more than the $100,000.00 that “no one needs”.

Stephen The Stepford Advisor wrote:

“You should reconsider your recommendation as it fails every reasonable test of jusgement.(sic)

Stephen, the recommendation and my judgment are just fine.

Moreover, the processes and practices that we talk about on YouBeTheBank.com and TheMoneyforLifeBook and blog are tried, tested and proven to produce results that are guaranteed – a word that Stepford Advisors are not allowed utter.  ”Guaranteed” is entirely legitimate in the context of dividend paying whole life insurance from mutual companies. I can assure you that “every reasonable test” of judgment supports what we teach and practice.

I can further assure you that the advisors who apply these practices in their planning help more people  than those who don’t. One of our understudies (a former Sr. VP with a major, well known international brokerage with a large ad budget) proposed his first case last week to a very sophisticated investment client and it passed “every reasonable test” of judgment for all parties – advisor, client, attorney, accountant and family. Imagine that.

Stephen, I want to end with a word of thanks, again. My mission is to educate and inform.  Your comments give me that opportunity. I urge you to learn more than you know, earn more than you imagine possible, and begin to question the shibboleths.

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