Why are some advisors so against putting money into insurance for long-term
financial goals? In this episode and by the end of it, you will understand
the primary reasons why advisors talk down IUL one of my favorite financial vehicles
until they finally understand it if they ever do. Then they usually become incredible proponents
of something they used to poopoo. You'll understand why.
So, I'm Doug Andrew and I've been doing this, what's this? Optimizing assets minimizing
taxes for clients for more than 48 years and if you've watched very many of my other educational
videos. I'm very passionate about helping people optimize assets minimize tax by using IUL
indexed universal life insurance contracts. That allows people to participate or earn money really
good rates of return when the market goes up which 70 percent of the years it does but not
lose when the market goes down and there's some decades like 2000 to 2010 where there were five
down years and none of our clients lost money in those five down years. They may not have made
very much but they didn't lose. But they made money when the market was up and that's why for
retirement you're able to protect your money from losses but participate with upside gains
and that gives you average rates of return between six to ten percent or even higher
totally tax-free. So, a lot of times when I begin to introduce people to this concept of max funded
IUL they will go, "Well, how come I've never heard of this before?", or else they'll start checking it
out and they'll start asking some of their family or even other advisors and then the advisors go,
"What? That's the stupidest thing I've ever heard of. I've never seen an insurance policy perform well",
and so people get you know cold feet. I would too if somebody reacted like that and what's so
funny is is sometimes when they say that I'll go well ask them where they put their money?
And a lot of times you know people say, "What? I've never heard of a policy that does that".
"Oh, really? Well, where do you put your money?", "We don't have any money but..."
I go, "Oh really", so you're asking people okay the blind leading the blind how to achieve financial
independence. But some people come back and say, "Well, I asked an advisor", and I said, "Well, what do
they do? What do they specialize in?", "Well, you know they're one of those asset managers. They take
money and they diversify it into mutual funds and so forth", and I go, "Okay, do you want me to be honest
or gentle?". Now, most people say, "I want you to be honest with me", I said okay, now I'm not trying to
tear down. I've never been a believer. I'm trying to tear down other advisors to build myself up.
There are advisors that do that, believe me okay. No, I'm saying well they just don't know what they
don't know because you can't be aware of something you're not aware of and actually it's a lot of
times not their fault. Now, I think they should be looking and studying things many times they're not
proactive but here's one of the biggest reasons. Most advisors out there in America and even the
world they get their securities license okay and it might be a series 6 or 7 or 24 or 63 or
what have you. I used to have the equivalent of all of those under what is called a series one. I could
sell any stock-bond mutual fund or whatever and my clients were never happier than when I got them
out of the market beginning in 1980 and I started putting it into universal life and then indexed
universal life, they were never happier. Their average rates of return doubled and even tripled
tax-free. Because in the market. Even if you averaged 12 percent you're only netting eight
after-tax in a tax-deferred IRA & 401k at the end of the day. But most people aren't earning 12% of the
market. They'll always tout well look at these big years. But if you look at real stock market history
DALBAR studies the stock market history and investor behavior and they say, "The average person
with money in the stock market if they bought and held. They left their money alone. They didn't get
involved emotionally should average 9.14% over a 20-year period." But that's before tax if you're
nine you're only netting six. But they said, "Sadly most people are not earning 9.14 they're earning
3.49", why? Because they're buying and selling at the wrong times. In other words, when the market starts
to go down 10, 15, 20, 25, 30, percent it doesn't matter most people panic and they go enough
already. I want out. I got to cut my losses they sell low and then they wait wait wait wait wait
wait wait wait and then buy high. Unfortunately, the average return is only about three and a
half percent which is pretty pathetic. That is the actual statistics from DALBAR. Now, let's give them
the benefit let's say you earned 9 and netted 6. The problem is most advisors make their money
how by turning your portfolio overturning your money. Most advisors make more money if they
constantly turn over your portfolio. Okay, time to sell these stocks and buy these. Let's move
over here. Let's transfer from this mutual fund over to here and so forth in the sake of
you know diversification or the market's going to go down so let's sell and put it over here and
every time they do that they get new commissions and sometimes they go "Well, we're fiduciaries.
We look out for your best interest and we're only going to charge you one percent of whatever
your portfolio is every year", now, that's whether you made money or not they get to take one percent.
So, if you have a million dollars accumulated with them they get 10 grand whether they made you money
or not that year and sometimes they think that is the best way to go one percent. Well, okay, if you
started out with 500,000 dollars and if they really did earn you a rate of return
like I've averaged my clients of nine point six percent. Let's say they did that and the half a
million doubles to a million and seven and a half years because that's how often it will double
and then a million dollars a two and another seven and a half and two doubles to four and another
seven and a half and four million doubles to eight million at the end of 30 years. If they charged you
one percent every year as that's growing you would have paid them just under one million dollars
in commissions and they say that's the best way to go. Whereas with IUL they say, "IUL that's
expensive. That guy is just making a bunch of commission on you", oh really? Yeah, we're fee-based.
They make a commission. Do you know the average commission on an IUL policy where somebody puts
in 500,000 might be $20,000 during the first one to five years. One time 20,000
let's say it's 30,000. If you were going to be buying a half-million-dollar house from
a realtor and the realtor said, "Hey, you can pay me six percent 30,000 when I sell your
house or buy you a house, find your house. You can pay a realtors fee of six percent one time or you
can pay me one percent of whatever that house is worth every year for the next 30 years", what would
you choose? Well, yeah, you would choose the one time upfront. See, when somebody gets an IUL policy
the agent only makes a commission on the new money that went in at the very beginning. They
don't keep making money off of the money you're making. Asset managers, they charge you one percent.
If that realtor charged you one percent and your home doubled in value every seven and a half years
they would end up making a million bucks. Anybody with any brains knows it's way cheaper just to pay
a one-time fee instead of an ongoing fee because that adds up. Does that make sense?
But see, a lot of asset managers they point out, "Oh, we only charge you one percent. They're charging
you five or six. we're cheaper", not in the long run. They make their money by keeping your money going
whether they make money or not. Sometimes they think insurance should only be used to manage risk.
You should only buy life insurance in the event that you die for death benefit. You should never
use life insurance as an investment. I go, really? Well, yeah, because a lot of times they'll say well
it's not an investment, Doug Andrew says it's not an investment. That's right. See, an investment in
the internal revenue code is defined as a place where you put money that eventually you're going
to pay taxes on sooner or later even in a tax-deferred IRA & 401k. I don't want to pay
tax on it ever so it's not an investment. In fact, the IRS says you don't want it to go over to the
investment section of the code you want it to stay under the tax-free sections of the code
72(e) 7702 and 101(a). Investments are usually volatile you can lose money some years and make money other
years. I don't want to lose during the down years but I want to make money during the up years.
I don't want an investment. But see, advisors sometimes say, "Oh, well Doug Andrew even says
it's not an investment", but see, it's so interesting how people twist things and
that's why a lot of advisors will downplay or say, "Oh no, you should never buy insurance as an
investment", and then I go, "I agree because it's not it's way better than one of those", and they
go what? Advisors make money churning turning over your portfolios. They usually have not checked out
IUL. But you can't believe how many times even some of my biggest critics have finally come.
I remember one of the top annuity salespersons variable annuity that's money in the market.
He came to one of my three-day training events. He was skeptical. He used to be on national news.
He was one of the gurus on NBC on the today show and he sat there and about a day and a half in he went,
"I have been advising my clients wrong for 20 years", I go, "Okay, don't beat yourself up. Now that
you know better sort of like good, better, best. You were doing something that was maybe better
than other things now you know it wasn't the best. But do you want to go out and tell your clients
before somebody else does?", Yes, and all of a sudden he became one of the nation's biggest proponents
of max-funded IUL insurance contracts. Whereas before, he went why would you ever do that? Why
would you pay for insurance if you don't need it? Just put your money in an insurance company in an
annuity and then you can put it on the market. When he learned about indexed IUL he went, "Oh my heavens,
I didn't know what I didn't know", and he totally changed. Normally, if an advisor humbles themselves
enough to actually admit they don't know what they don't know and to be open-minded and they come and
they learn they usually go, oh my heavens. I've done this with CPAs and tax attorneys for years.
So, they do a hundred and eighty-degree turnaround and they begin to be a proponent of something that
they used to downplay. They used to say, "What? What are you thinking putting money into one of those?",
and then all of a sudden they see actual history. They are the very ones that sometimes say,
"I've never seen an insurance policy earned more than 2 or 3 percent",
really and then we show them hundreds of statements of our clients who have earned 16%, 25%,
61%, 153%. See, this statement this isn't fabricated this is real and they go,
"Well, I've never seen one do that", well, it's because you've never taken the time
to study and check into it thoroughly to see one done correctly. So, hopefully, you'll understand that
there's a lot of reasons and you can study them in the book in here there are different
reasons why sometimes advisors will downplay it or say, "Well, I don't think it's the best way to go".
I think you ought to maybe diversify a little bit. But I think 40 to 60 percent of your money
ought to be totally tax-free and I know of nothing better than a max funded IUL which I call a laser
fund that can do that for you. So, make sure to post a comment as you get educated here. Share it with
others who will get insights. But if you haven't claimed your free copy of this book do so right
now. Go to laserfund.com you contribute a nominal amount towards the shipping and handling. I cover
the rest of that cost. I pay for the book. I'll fire out a copy to you. It's 300 pages of charts
and graphs. But when you're in there you have the opportunity to set up an appointment if you want
with an IUL specialist that I've sort of trained and approved. They've had to pass a proficiency
exam of over 150 questions in order for me to trust them and then they have to continue with
education to make sure they're doing it correctly. So, this is about you and your brighter future. So,
get your free copy study it and then meet with somebody who understands how to do it right.