“They call me Mister Tibbs.” In the Heat of the Night, 1967

Jack and Theresa relied on the same financial advisor for over ten years. When Jack got a new job in a new city on the other side of the country that relationship became untenable so the couple went looking for a new advisor. After several interviews Jack and Teresa concluded that the advisors they met in their new city did not recognize or understand what their friend and advisor “back home” had taught them. In fact, every one of the advisors they interviewed told them that building their financial foundation using cash value whole life insurance was not just wrong but went against everything the advisor had been taught.

One advisor suggested that Jack and Theresa should replace their cash value policies with term insurance and invest the money they had accumulated in the stocks he recommended; ENRON, Qwest and MCI.

Another advisor wanted Jack and Theresa to exchange their whole life insurance policies for variable universal life insurance policies because she could illustrate greater future value with that type of insurance plan. She did not, of course, make it entirely clear that these policies had no guarantees and that they could lose all of their money with this approach.

A third advisor encouraged Jack and Theresa to refinance their home at 95% and “harvest” the equity from their home and the cash from their whole life insurance policies and put all of that money into a new kind of product called equity indexed life insurance. The premise was that the new product would earn more than the interest charged in the mortgage and the lost guarantees and dividends from their whole life contract. Again, there was no discussion of the fact that taking such action put their real property at greater risk and did not replace the guarantees that were present in their whole life policies.

When Police Chief Gillespie challenged Virgil Tibbs’ self image and deeply held beliefs, the detective defended himself and his beliefs with a simple emphatic statement. Every day we face the same kind of challenge to our common sense about how we handle our money. An onslaught of advertising and misinformation tells us that our conservative financial values are foolish or simplistic or contrary to the conventional wisdom – which is no wisdom at all.

There are many reasonable and sensible ways to handle your money. Universal life insurance, indexed life insurance, investments and home equity can be important pieces of the puzzle that is unique to your situation.

Any approach that suggests, however, that you can build wealth without establishing a foundation of money that you control, is misleading at best and illegal at worst. Suggesting that you can behave the same as people who have already accumulated great wealth, denies the reality that those who have great wealth behaved differently while accumulating their wealth than they do after they have it.

Every reasonable financial “plan” should aim at

1. eliminating debt-to-others
2. guaranteeing you a secure income
3. making sure you have ready money to deal with the ordinary and the extraordinary events that make up your life, and
4. creating a legacy of your wisdom and wealth.

Once these goals have been met you can consider the schemes of the merchants of misinformation and the financial snake oil sales reps who want your money in their pockets.

by Jeffrey Reeves MA, www.youBEthebank.com

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