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Most people do not realize that there is a rule in the financial services world that you cannot offer products outside your employer’s offerings.  Meaning, as a client as a large brokerage house or captive insurer, you are not able to offer clients financial asset classes that are not offered through your employer, even if that would be the best option for the client.  It is a prohibition against ‘selling away.’  So, while the industry is trying to convince everyone that fee only advisors are automatically better, they never mention this little secret.    An independent advisor is not subject to this rule as they are able to represent hundreds of companies’ offerings.  I leverage this open market ability to our clients’ best interests and we know which offerings will best meet our clients’ objectives.

We challenge convention because it fails most Americans.  The annuities of today are NOT the contracts of your parents and grandparents.  For example, you no longer lose all your cash value if you die pre-maturely as there is a death benefit.  We usually use no-fee products, so there are tremendous benefits available including tax free long-term care and safe growth for little to no fees, and certainly less than the annual money management fees charged by a money manager, in most cases where we would use such an asset class.    New research from a Yale Finance professor was just published in January 2018 making the mathematically case for using indexed annuities in lieu of fixed income bonds, given the low rate environment, which I would be happy to share with you.  For these reasons and more, it is not appropriate to disregard this financial asset class for the reputation rumors of old. 

Depending on whether a client needs to emulate the pension they are no longer getting from corporate America through a lifetime, guaranteed income, or, if they do not have an income need, but simply want off the roller coaster of the market by protecting what they have built and earning safe returns going forward, the client must give something in return for meeting these goals in guaranteed contractual ways (based on the claims paying ability of the insurer).  The price is usually somewhat reduces liquidity in the first seven to ten years.    However, mathematically, by walking through your worst-case liquidity cost, you can see how these products achieve major goals, not otherwise achievable, at extremely reasonable rates.  Ask for your specific cost analysis while working through the process. 

In the United States, life insurance has been protected in the tax code since its inception and is the most highly favored asset class under the tax code, the ‘golden child’ of asset classes under the tax code experts say.    Because of this extremely favorable tax classification, life insurance has been leveraged by those in the know to build lifetime tax-free access used as your bank (liquid savings), college funding for children and grandchildren, housing funds, and full retirement replacement vehicles.  The opportunities are endless and the lifetime benefits are an incredible planning tool.  Life, when used just for death planning, is sort of really missing the boat.

This is a common misconception because when you utilize a permanent life policy that builds cash value, the premium can seem high.  But, in most cases, once you realize that most of the cost is going to overfund the cash value, while a small percent is going to pay for the actual insurance, you will see that the cash value is really what you are funding and not the cost of the insurance itself.  This can be misleading, so do not let this prevent you from leveraging this asset class without making sure you understand what is really happening within the policy. 

Yes – I love putting plans together for your children or grandchildren. I am not a fan of the market based, but tax-advantaged 529 plan or state pre-paid plans that only lock in certain aspects of the college expense.    The best example are those that built college funds exclusively in the 529 when their college student was set to begin school in the Fall of 2009.  Since we had the market low of the Great Recession in March 2009, pulling money out in August of 2009 to pay for school would be the worst possible scenario because we need to not TOUCH that account so that we can recapture all that we lost in the Great Recession.  But, it took over 4 years for the market to recover and get back to what it had lost, by that time your child is graduating from their 4 year program.  As you can see, a market based program that must be accessed at a specific time no matter what the status of the account, just doesn’t work.  If the market crashes right before they are due to go to school, all that hard work you did to save and provide for them can be ruined….  Fortunately, there are other tax advantaged programs that do not have that market risk of loss at exactly the wrong time and we love working those numbers for a plan.