82: Clarifying the Math in Finance with Todd Langford, Creator of Truth Concepts

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Hello, everyone.

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A quick heads up before we get started with this episode, we will very soon be

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changing the name of this podcast from The Fifth Edition to "Strategic Whole Life."

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And don't worry.

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The topic of our podcast is not changing.

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We're fully committed to The Infinite Banking Concept and helping

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people understand how it works.

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The reason we're changing the name of the podcast is we found that The Fifth

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Edition was just a little too esoteric.

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It was originally a call back to the final print edition of Nelson

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Nash's "Becoming Your Own Banker."

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But it wasn't helping people find us and the information that

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we're sharing in our podcast.

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So keep an eye out.

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When you see the new name, pop up on your feed, it's still us.

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And we're looking forward to doing many, many more episodes with you.

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Thanks.

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And now let's get on with the episode.

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Episode number 82.

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Today we have the pleasure of talking with Todd Langford, who is one of my

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mentors in this business, and Todd is the founder and creator of the Truth Concepts

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software, which is an advisor focused software package that really provides many

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tools helping advisors show the whole truth behind some of the different things

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that are happening in our financial lives.

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And really grateful to have Todd on this podcast.

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As many of you know, that listened to the show.

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I made a big career change several years ago out of tech and into this business.

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And one of the things that helped me do that, I actually went to one of

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Todd's trainings before I was even in this business because I just wanted

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to see how everything was working.

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I met him and his wife, Kim Butler.

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And they really helped me meet the right people, including Trent

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Fortner, who was on the other day.

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To, get a really fast start in this business and helping people,

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with their financial lives.

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So Todd, thank you very much for joining me today.

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Maybe we could just kick this off and we could learn a little bit

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about you and your background and how you got into this business because

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it's a really interesting story.

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Sure.

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Really happy to be here.

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Thanks for the invite.

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I I love this industry.

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Talking about it, getting the word out there it's it's really an important piece.

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For me, my background's, you came from the tech industry.

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My degree is actually in biology.

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I was too, actually.

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I was a biology major, didn't do anything with that major, went into

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tech and now, yeah, so that's good.

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it Pulled me out because when I was actually going to school for my biology

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major, I needed some part time work and the IBM PC had just come onto the scene.

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So, I, I was helping actually a financial advisor, a big estate

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planner, 'cause for the most part in those days, life insurance and overall

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financial planning was not something that was done for the common person.

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It was really just the high income type of people and it was

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mostly estate planning type stuff.

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I found the computer fit me.

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And so I started working with.

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A financial advisor who was he had a lot of computers and that kind of thing.

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So the place I was working through the computer place I spent a lot

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of time in Norman Baker's office, that's my mentor in the industry.

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And I created spreadsheets so he could go out and talk to his

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clients and those kind of things.

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And then we were introduced to the type of planning that you and I

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do now today for, for everybody.

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And, um.

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it kind of went against the grain at the time, and so it was like, wait

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a second, this couldn't be right, and set out to disprove it, and all

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the spreadsheets actually showed that, you know what, stuff is real!

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YEah.

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So us spreadsheet nerds really can make a difference sometimes,

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there you go.

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But but that really made me see just the depth of what it is that we do

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and the impact that it has on people's lives, and so it was a total shift.

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, so you've been in the business for a long time.

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You've been on the forefront of a lot of the different systems that

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have been put in place, especially software systems in this business.

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How would you define the people that are in our circle, like in the little kind of

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circle that we have inside the financial services business and insurance business?

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What would you say We are , if that's

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Yeah, that is a, yeah, that is a different group of people.

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It's a group of people that really care about their clients overall.

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And so I would say this, the industry as a whole deserves the bad reputation it has.

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Okay.

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It's got a, it's got a pretty poor reputation and it's earned it.

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However, I don't have to deal with the general public in our,

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in the, of the industry, right?

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Our inner circle of advisors they're unique.

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They're the ones that are trying to do it right.

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They're the ones that are getting sometimes blamed for some of the

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bad stuff, just because they're part of the, the bigger picture.

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right?

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They continue to try to get the message out there and really

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show people how to succeed.

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And that's, that is a different piece.

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And, I think a lot of times people think We could always have robo advisors, right?

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If it's all about math, and sure, there's a ton of math.

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Here I am from a software side.

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I understand the math.

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That's a big piece.

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And yet, if it's all about the math, and that's all that it is...

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Then, why have advisors?

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The truth of the matter is for most of the industry, robo advising would probably be

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better than some of those advisors, but for our inner circle, for the people that

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you and I get to connect with from the advisor standpoint, that, that's where

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we can look outside of the numbers and say, okay, yes, the numbers say this.

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But because of your particular situation, maybe you need to

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shift this way or that way.

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So the numbers give us initial place to guide and say, Hey, this is the

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pure efficiency, but we have to step back if we're going to really

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be advisors and look at what the client's actual Situation is right.

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Exactly.

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It's not, someone's life is not a math equation.

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It's we really have to pay attention to, what's going on and pay attention to their

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situation and do what's right for them.

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You answered this in a way.

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Why do you think the folks in our circle are so important and so needed right now?

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Because there's so much misinformation out there and that's a weird thing.

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um, You know, people say well, wait a second, how could you have misinformation

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in something that's math based?

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But, but what happens is the.

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The math that's done incorrectly, the math is done right, the formula is wrong.

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Okay, so that's the big picture.

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It's, and what happens is people confuse grade school math with financial math, and

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grade school math's all about right now.

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And so that's true, addition, subtraction, multiplication.

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But when you get into financial math, there's a third element, a

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third dimension, and that's time.

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And you can't take time out of the formula and have an accurate equation.

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And yet, It's done all the time in the financial industry, like an

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extreme example, let's say John came up to you and said, you know what,

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give me 50, 000 and I'll give you 1, 000 a year over the next 50 years.

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Okay if you look at grade school math, it's the same money, right?

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There's no difference, right?

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You should be perfectly happy with that.

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Okay

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that's because the element of time is left out of the equation, and

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nobody would ever do that, and yet that's the kind of math that's often

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done incorrectly in the industry.

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Yeah.

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And would you say um, what's a more common example of that?

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Would it be something along the lines of how much interest you pay

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on your mortgage, that kind of stuff?

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Yeah that's one that really hits home pretty hard and again,

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the element of time's left off.

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It's, these advisors or these quick pay off your mortgage

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schemes, those kind of things.

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Oftentimes, what it is they add up the interest you paid over time

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and compare it to something else.

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And they leave out the time value of money, and you just can't do that and

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have an accurate, the math is right that they've done, it's just the formula is

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wrong, so it's the incorrect result.

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And so with that is we've talked quite a bit about, how 30 year

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mortgages are usually better than 15 year mortgages for that very reason.

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And it depends on the time frame.

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We've had, we've been really fortunate with interest rates.

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People have gotten to where they expect them to be down in the threes

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and fours, and that's pretty unique, and yet it's gone on for a long time,

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and now that we're seeing interest rates, Kind of climb up there.

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There's a different discussion around mortgage rates.

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I think they'll come down just when it hurts, when it gets

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to a place they see that it's really hurt the housing industry.

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But, who knows?

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That's speculation.

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But really that's one of the areas that's really misunderstood

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is how interest rates work.

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Yeah.

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I've had some conversations with people and, they're

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they'll buy a whole life policy.

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They'll, want to use policy loans to go buy some kind of asset, whatever

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it is, or maybe it's even a liability.

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It doesn't really matter, but they'll, they'll get into this mode of trying to

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pay that back as, as quickly as possible.

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And.

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So I'm wondering what you think about the way that I've tried to talk about this.

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I'm like if you're, if the idea is we want to use other people's money

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to get a kind of multiplier effect on what we're doing or create some

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efficiency on what we're doing.

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If, if you take an extreme example, if I borrow the money today and I pay it

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all back tomorrow I paid the loan off and I saved a bunch of interest, but

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didn't I really just use my own money?

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You know what I mean?

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So I'm no longer using other people's money.

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So there's this idea that we'll use other people's money, but then

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they want to not use other people's money as quickly as possible.

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So it's like a weird disconnect, I think, in terms of how people

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are thinking about interest.

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it absolutely is.

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And everything has to be put in perspective and.

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Here's the thing.

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The interest rates really need to drive that decision

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from pure economic standpoint.

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Now, not from a real world standpoint of what kind of risk and other

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pieces, but just looking at the pure economics, if I can think about this

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if I can earn 6%, so I decide to borrow money, say at 4%, To go put

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it in something that I'm earning 6%.

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That's a 50 percent increase and people aren't taught to think in those terms,

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but that literally is how that works.

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Most people say, Oh, that's a 2 percent increase.

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No, it's not.

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It's actually a 50 percent increase going from four to six.

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And so if we understand that piece, then why would we want to take 6 percent

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dollars to pay down 4 percent debt,

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That's right.

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And so that's what happens when we accelerate those pay payments.

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We have to step back and look at it in perspective.

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And I know that part of the fear comes in from what's put out there on these

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quick payoff schemes and other things is the amount of interest you're gonna pay.

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Okay, the interest is irrelevant.

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I'm gonna earn more interest at six, then I'm gonna pay it four.

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So the point is I'd want to keep that 4% as long as possible if I could earn six.

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Now again, pure economics.

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But but you're right.

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I think most people understand, Hey, when I go buy a piece of real estate,

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I want to use other people's money.

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And then they get into a mode of let's take every extra dollar and

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put it back against this loan.

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And we don't want to let those loans just sit there, but we may want, if

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we've got some opportunity that's larger than the loan rate, the loan

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cost, then we want to take advantage of that before paying the loan back.

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But I also think some people, because of the way life insurance

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is talked about, if you're talking about a life insurance loan.

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I think some people sometimes have this idea where I'm borrowing my own money,

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so if I pay this back, I'm paying myself back, and that's just totally not true.

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You know, It's a separate loan with the insurance company, separate from, our

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cash value is just the collateral so literally, it's just like borrowing money

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from the bank or anywhere else where we have to put up collateral, right?

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Yeah.

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And I would say it's not unfortunate that we don't pay ourselves back

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because we have this, 150 year old insurance company running everything

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for us that we're a part owner of.

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Of course, we want them to be profitable.

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But you're right.

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It is described that way far too often, which is, interesting because we talk

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about, noise in the typical financial planning world where there, there's

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also a noise and in our world that we have to overcome sometimes as well,

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just from, maybe some misunderstandings or incomplete information.

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We had a conversation about whole life insurance and one of the, one of the

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things that you talk about in your Truth Concepts trainings is the quote unquote

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horrible return of life insurance, right?

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Of whole life insurance.

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So people have this, there's really a very strong sway out

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there from various sources.

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That a lot of people are really just convinced that whole life insurance is

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this ridiculous, terrible investment.

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When they compare it to other assets, can we talk a little bit about that?

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I think part of that comes from, again, we talked about the industry as a whole

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has maybe not the best people in it.

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It's got a bad reputation.

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It's earned it.

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And I think, unfortunately, that's stretched out into some

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areas where now life insurance, for example, is an easy target.

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People say, oh, that's got a terrible rate of return.

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Everybody just jumps on that same bandwagon without actually

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looking at what happens.

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And if you understand it, it's got a phenomenal rate of return for the

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type of asset it is, especially.

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But what happens overall is people compare the net return in the life

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insurance policy to the gross return in everything else they're comparing against.

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So it's not the same, it's not the same animal.

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And if you boil that down and you see what you would have to earn,

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um, in an alternative investment, Gross to get the same net return

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you have in life insurance policy.

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I think most people would be pretty shocked based on, you know

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what the word on the street is about that, that terrible return.

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But with life insurance people talking about, well there's high

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commissions, there's this and that.

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Yeah.

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But the commissions are already taken out.

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The returns that you're looking at are all net of that.

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And then people look at like market assets, uh, you know.

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Hey, I could put money in the market and earn 8%.

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Okay.

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That's 8% percent gross.

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That's before taxes and that's before commissions.

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So now then when the commissions and fees, you do have to take that off

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your return, cause those are going to come off of that 8 percent and now,

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wow, just to do what life insurance policy does, you'd have to do 8%.

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Every single year, and you still wouldn't even have the death benefit

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or the other benefits that come with the life insurance policy.

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If you really take an honest look on a level playing field, which is

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what TruthConcepts is designed to do, is look at everything in light with

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all of those extra pieces, you'll see it has a much better return.

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It's a shock for a lot of people.

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And it's interesting because a lot of people, when they make these

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comparisons, they're first of all looking at whole life insurance through

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the lens of an investment, which is an incorrect way to look at it.

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So you can tell already that they they have all these misconceptions about

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it because the only other thing they know is to look at like how a mutual

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fund is set up or something where, you know, you put your money in and then

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the commissions come out, then the fees come out, then the taxes come out.

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So they're really, they've really been trained to look at financial assets really

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in only one way where life insurance is a completely different type of asset class.

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I usually call it a cash asset when we're talking about, that type of thing.

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And that's how the cash value I think really operates.

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But it's so much more than that when you count in all the things

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you can do with the death benefit.

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That's, in my opinion, so the cash value, obviously, infinite

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banking, I'm all about it.

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But man, if you, if that's the only way you're looking at this and

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you're really missing out on a lot of strategies that can be done because you

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have the presence of a death benefit.

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Yeah, see, so what you touched on is hugely important, and it's the

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piece that so many people leave out, and that is that class of asset.

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Everybody always wants to compare life insurance to this, hey, I can do 20

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percent in real estate or whatever else.

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Yeah, but in order to be successful with real estate or successful with your

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investments in the marketplace, you're carrying a certainty asset along with you,

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and that is cash or in the place of your equities portfolio, it's typically bonds.

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Okay.

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So that certainty asset that you have to have.

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Why have it at those low rates where it's not really that much of a certainty asset

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anyway instead of having a guaranteed place with whole life insurance?

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So that's really what you're talking about is that savings cash

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asset, not the investment piece.

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One of the analogies I like to use is, Spice of Life.

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We need Spice of Life.

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That's part of getting us past the boredom.

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And life insurance can be considered boring, right?

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Because it does what it's supposed to do day in and day out.

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People like to have a little bit of excitement.

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They like to see some of those ups and downs.

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That's why they invest in more risky places, okay?

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It's like getting on a roller coaster.

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If you put your kids on a roller coaster, you're going to make sure

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the seatbelts fastened, right?

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So they get to have the fun of the excitement and ups and downs, but

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they've got that certainty asset to make sure they stay inside of there.

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And that's really what we're talking about with the life insurance

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cash value or cash, which is what most people end up doing.

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They've got a bunch of real estate.

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They've got a bunch of cash laying around earning nothing.

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Why not shift those dollars to life insurance and actually get

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a return and a death benefit?

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Throw it in together.

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And some other protections as well.

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I had a buddy during COVID and, during that little market downturn in 2020.

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And I remember something he said, he was like, I'm not even looking

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at my retirement account right now.

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I can't even look.

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And it's how long can you afford to not look, at your retirement account?

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Like how long is that going to work for you?

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So, um,

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You know, Having at least some of what you're doing in, have the,

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having those types of guarantees and this comes directly from you, Todd,

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having that certainty allows you to take some of that risk, just like you

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were, what you were saying, allows for the, that spice of life piece of it.

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I was just going to say here's the thing.

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You can map stuff out on paper with those exciting assets, the

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investment side, but there's always those unknowns out there, right?

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That you can't put into a math formula.

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This real estate deal can look great on paper, but then COVID could hit

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or 911 or whatever other black swan event, which we know is going to

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occur right out there in the future.

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They're coming.

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We don't know what they're going to be, but they're coming.

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It's just a continuous process.

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So what is going to happen to that asset?

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If all of a sudden, let's say real estate, you're not getting

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renters because of a change in the marketplace or something like that,

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what do you, how do you survive that?

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And so without that certainty asset in place, whatever it is, you really the

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risky assets are more like gambling.

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You might as well put your money on the slot machine or the roulette

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wheel and see what happens.

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But if you want to actually do investing in those ups and downs

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types of assets, you've got to have some certainty held back.

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So that when those events occur, you don't lose everything.

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And the, it's the certainty asset allows you to get through those bad points.

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Because almost all the time that happens, immediately after the critical

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piece is over with, All of a sudden, the investments start to soar again.

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If you've lost your investment in that process, you didn't get to, you

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didn't get to experience the high side.

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And that's what, so the, I just actually posted a thing on LinkedIn, there's

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so many people out there talking about how it's dumb to hold on to cash and,

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these other things you should have your money in whatever real estate

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or whatever the thing of the day is.

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So meanwhile, you've got these, the, some of the most well respected

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companies, I'm just thinking of a couple examples like Apple and Berkshire

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Hathaway they're holding on to hundreds of billions of dollars of cash.

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And why are they doing that?

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Because they know that like you said, if one of these Black Swan events,

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there are going to be people that are not in a position to hold on to

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those investments and they're going to have to sell and those companies

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are standing by ready to buy it up.

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And that, that's where the real.

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That's where the real investors really make big differences.

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It's not like just taking every dollar out of your system and

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always buying something with it.

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Like having some timing is important, but we've been taught and we've

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been taught and it's not necessarily people's fault because, putting money

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in a bank, you don't earn anything.

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So we've been.

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Todd, I would say actually we've been conditioned, because there's, zero growth

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in a bank account almost that, it doesn't make sense to hold onto cash financially.

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So everyone's always looking for something, but if we have a place to

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put cash that to use your words, earns a respectable return I think that could,

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change a lot of things and let people, discover investments that really that

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the timing is right, which is probably one of the more important things.

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That's exactly right.

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Because, if I am looking at, wow, my option is zero with this cash, then

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I got to find somewhere to put it.

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And I'm just going to throw it at whatever comes along.

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So it may not be the, A, the best time to buy.

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But.

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One of my good friends in the industry Garrett Gunderson, so Garrett

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Gunderson talks about investment DNA.

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And I think that's a huge piece when we talk about the investment side.

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We can't just be looking for something we think is going to do a return.

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It has to be part of us if we're going to survive.

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And I've seen this over and over thinking about real estate.

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People get on the bandwagon, Oh, real estate's a great place.

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So we're just going to buy some real estate.

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Okay.

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Do you like real estate?

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I don't really know much about it.

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No.

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Guess what?

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That person is not going to succeed with that piece of real estate.

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And yet somebody else could come in and buy that exact

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piece of real estate from them.

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Who's invested in it from something bigger than just the money.

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And they'll make it succeed.

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So there's some pieces there that we have to be careful about.

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Of buying investments that actually fit us and that we have some say in and that

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we're actually enthusiastic about, not just the hope of some return, because

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we probably won't do the right things,

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Man, that's such a good point.

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And it, it didn't used to be like, if you didn't want to have to think about

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anything, you used to be able to just put your money in a bank and earn, I don't

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know, 8%, maybe even a little bit more.

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And that's what those were for.

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If you didn't want to think about an investment and you didn't want

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to take the time to learn and understand what you're getting into,

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you used to be able to just put your money in a bank and, it would grow.

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But now people are.

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Like you said, just looking for places to put dollars.

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So they're getting into all these different types of investment avenues.

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They don't really know what they're doing.

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And I'm not saying don't go out there and learn, but I'm just saying, maybe

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don't put every, all your money into it.

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You know what I

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right?

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Have a holding place until you can decide that's the place to go, right?

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And that's what's really key about what you said earlier.

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It's don't just throw it out there into some place you have no idea how

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it works, but people do it because they don't want to see it sitting at zero.

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So let's put it in something that's a good holding tank and let's go

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learn about these other things and see maybe there's an investment

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that I'm really excited about.

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If I'm really excited about it, I can probably make that investment work.

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Sure.

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That's great.

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We had a conversation about switching a little bit on the same lines, but

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switching gears over to, investment portfolios, we were talking about

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the certainty aspect, and most people are trying to get that certainty with

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bonds and, in a typical, whatever, 50 50, 60 40 type of portfolio.

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Can you go through what we talked about before about that situation and how

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whole life insurance might be a great alternative rather than trying to use your

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bond portfolio to provide that certainty

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So what happens?

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there was an article out.

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um, I wish I could remember exactly what the headline was, but it

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showed a Wall Street guy clearly with the stuff in behind and, oh

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my gosh, this is just the worst.

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And it was this idea, that because bonds have hit a new record of 4.

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8 percent, and it's going to wipe out the equity side.

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And it's so so they're touting 4.

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8% Gross, before at least a point in fees, plus taxes are

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going to have to pay on that.

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So they're still well below the return on life insurance policy,

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and yet this is supposedly going to really compete with the equity side.

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And I think what happens when we start to talk about life insurance

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to fill that bond area could be huge.

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And most people...

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They look at their portfolio and they don't talk about the bond side.

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They talk about the equity side, right?

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It's the one that's got the excitement and the big returns on it.

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And the bond's something they have to have in order to shore up in case things

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don't go like they're supposed to.

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And so.

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they end up pulling money, those bonds at a low rate, pulling money

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from the equity side when they have to do that rebalancing each year.

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And so they really hurt the return on the equity side.

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But if we could get life insurance to play the role of that bond portion,

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not only do we pick up those external benefits that we have with life insurance,

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but now we're actually pulling less money because of the better return from

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the equity side when we rebalance, so it lets the equities get even bigger.

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Yeah.

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Not to mention all the tax you pay every time you do that.

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So it's just dragging it down more and more.

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tHat's it's such a powerful conversation to have about that, by the way, that

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article you mentioned, the people touting the high rates of return of bonds.

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Those are usually the same people that talk about how whole life insurance

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has a horrible rate of return.

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So it's a, it's an interesting disconnect that is out there with a

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lot of the typical financial people.

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So man, that just takes everything.

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It's such an easy Improvement to make, obviously as long as you

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qualify for life insurance, which is why it's important to, do it.

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You're never gonna be younger or in better health than you are today, most likely.

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So if you qualify today, it's probably the best time to get it.

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I think it is interesting on one of the things you said about health and age,

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and it's funny, a lot of times people will look at life insurance let's say

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that they all of a sudden see the light and realize, you know what, maybe I've

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been lied to all this time frame, let me look at life insurance, and maybe

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they're older and they're thinking, man, if I'd just done this when I was

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younger, as long as you're healthy, The rate of return in a life insurance policy

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is actually still good on older people.

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The premium's higher, but that higher premium creates more cash value, and so

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over time, as long as you're comparing the same time frames age is not a huge...

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Impact on what you can get from the standpoint of return over time is

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just if you can stay healthy, right?

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That's the big piece.

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That's a great point.

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And, we all have older clients and then, and, the numbers work out.

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They're pretty good.

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It's really, like you said, it's just the health piece of it.

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Something that I would like to talk about just with whole life, one of the

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things in infinite banking and in our world, and, just we talk about the noise.

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One of the, one of the biggest sources of noise is policy design.

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There's a lot of just Just a lot of stuff out there that I would call

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inaccurate information, a really high focus on getting the most cash value in

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the first year of the policy, which of course, on this podcast, we talked that

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there are always trade offs to that.

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By the way another maybe you could say it, what you learned from

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Norm Baker, there are no deals in the life insurance industry.

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Yeah, that, that is such a huge piece of, I try to get that across to advisors

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so they can spread that to their clients and get it out in the world.

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But there really are, there's no deals in the insurance industry

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and that's, think about it.

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I think most people can relate to property and casualty insurance

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buying a building or something like that and then having to insure it.

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There's different exclusions that the insurance companies can do.

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They can say, oh we're not going to.

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We won't insure it if this particular thing happens and

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you can save some money on that.

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Why?

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Because basically the insurance company shifted some of the risk

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off of their shoulders back to the person that owns the building.

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And so everything is that way.

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And when you see something in the insurance industry where,

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okay, this is really cheap.

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If it's really cheap, then the insurance company has probably figured out some

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way of shifting some of that risk off.

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And it's not that it's a bad thing, it's just the way it is.

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Everything, they use actuaries on everything.

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What's the likelihood of this many buildings burning down

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in this amount of time frame?

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Okay, so we have to have the proper amount of premiums coming

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from that pool to cover those.

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And, and still be profitable so that we can pay claims.

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Same thing happens in the life insurance industry, right?

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And so if you have a, a particular product that's like super cheap compared

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to everything else if you dig into it, you're going to find out there was some

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risk that was shifted from the insured.

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And so there's just no deals.

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Everything is a trade off between cost.

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And risk for the insurance company.

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And it's just the way it works.

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It has to, and so, when we understand that and we can really dig in and

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find out where these anomalies are

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And when it, so when it comes to policy design, what are some of those trade

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offs when you, compare a couple of illustrations, one of them has like just

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say 90 percent cash value in year one and the other one has 50 percent or 60%.

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In your mind, what are some of those trade offs that are happening when, you get

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these folks that are, just super focused on getting every last dollar they can in

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liquidity in the, from day one or year one, however you want to look at it.

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right.

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For them to do something like that.

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It violates the actuarial curve.

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And so the insurance company can play with that curve a little bit.

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And typically when you push the cash up front, hard, then the policy, if you

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follow it out over time, you're going to see a place where it actually drops

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a little bit in order to compensate for the fact that they overpaid

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and violated the curve up front.

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They've got to get it back on that curve long term because

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everything's on the same curve.

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And what you'll typically find if you look at the actual return year

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by year and say at the, on those high early cash value policies.

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They're touted as it's higher on the cash value because

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there's less commission paid.

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There's less commission paid in the first year, but there's

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actually just as much paid.

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It's just spread out.

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And so there's some fallacy there about the way it's talked about.

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But what you'll see from the client standpoint is somewhere, usually around

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the 14th, 15th year, there's a crossover.

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And that policy that had.

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More cash up front actually performs poorer in the long run.

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And we're talking about somebody's life, their whole life.

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That's the point of whole life insurance, right?

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Do we care what happens in the front end for a few years

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versus the 50, 60, 80 years this person's going to be alive, right?

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We want the return for the long haul.

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And when we look at it in the right perspective we want to be

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where we have the greatest return.

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And typically, the early...

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The early high cash value policies are less because the insurance companies

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are on the hook for more up front.

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They have more risk in those policies.

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It just goes right back to what we were talking about.

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And, there's a lot of talk too along that line on policy design

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of, Oh, you've got to put a whole bunch of PUAs on the policy, right?

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The problem with that, it, it's good.

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If it's in the right real world position for the client.

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And so it all depends on whether that's actually the best thing for the client.

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If we need a bunch more death benefit for the client, then we're going to want

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to see those dollars go a different way.

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And so it's all going to depend on where the client is.

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And so just a blanket statement of, if a policy doesn't have PUA's

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on it, it's a terrible thing.

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, that's probably just a way to sell a new policy.

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That's what the advisor's doing when they say that, instead of

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actually looking at the numbers.

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What do you think it is that the, if the insurance companies are taking

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more risk in the early years of these high PUA policies, are they

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doing it because they're able to sell more life insurance, or why do you

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think they're willing to do that?

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Are they just they feel like they need to compete on that level because

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the conversation has shifted more to cash value over the last, I don't

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know, 30 years with life insurance?

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It has.

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People get blinded by that front end.

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And it's the PUA's, see what'll happen is the same cash as let's say we

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had a 50 50 life insurance policy.

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50%.

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Base premium, 50% additional cash.

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That additional cash buys very little death benefit.

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Okay?

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And so the insurance company's on less of a hook if death were to occur

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in that scenario, versus if that whole premium was base, it would've

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bought a lot more death benefits.

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So the insurance company has more risk on.

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All base policy.

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And it's funny people look at that front end.

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It's oh, I don't like the fact there's not as much cash up front.

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So that's why I'm gonna put money in my qualified plan or some other place.

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What's interesting about that thought process is you don't have any cash in

Speaker: 00:33:31

your qualified plan until you're 59 and a half, not any usable cash, right?

Speaker: 00:33:35

So what does the front end really matter?

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What you really care about is what that does over time.

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I think there's just in the last few years, we've been way too much focused

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on pouring a bunch of additional paid up additions in the life insurance

Speaker: 00:33:49

policy versus, versus looking at how that fits into the client's life.

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Right?

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Yeah, it's a challenging discussion because, you get to, you get an investor,

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like a real estate investor especially, I find them to be more challenging

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or more frequently challenging than others where they're just so focused

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on the lost opportunity cost in the early years of a life insurance policy.

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But, I've used TruthConcepts to run the numbers and I've used my own Excel

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spreadsheets and there is no question that if you can think past maybe five

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to 10 years, if you're a 30 year old or 40, like how long are you going to live?

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How long are you planning on living?

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And so people get focused on, the first year.

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Meanwhile, just as you said a minute ago.

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What about the next, 70 years?

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But it is a very difficult discussion to help people understand that value

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is being created in those early years.

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I don't know if you have had a way to, get through to those people.

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Yeah.

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It's tough because in most people's mind, what's happening is they're thinking.

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Why would I take money that I'm earning 20 percent in the real estate

Speaker: 00:35:02

world with for this, four, four and a half percent life insurance policy?

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And that's not really the dollars we're talking about.

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We're talking about those other dollars that you have to have

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sitting around to make sure that 20 percent actually works out.

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And that's those cash pieces that we talked about earlier, right?

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So you got to have that.

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But what's interesting is.

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When you look at the whole scenario, you look at all of the ripples, that

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whole strategy has to be analyzed.

Speaker: 00:35:28

And so with life insurance, when we look at using a whole life insurance as

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our cash certainty asset for that real estate, so it helps us on that end.

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It also provides a place where if an opportunity comes along, we've got

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that cash, and we could jump on a great real estate deal or something

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else that comes along, right?

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Because we're in good position.

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But when we look at the long term piece...

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That death benefit also plays a huge role.

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Most the time, at least with the clients that we deal with, most the

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time one of a couple, if they're married handles the real estate.

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It might be him, it might be her, whatever the situation is.

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But the other spouse, a lot of times, is wired differently and they don't really

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know much about what's going on there.

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So what happens if that primary spouse dies with all that real estate that

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they're gonna lose All of that was built up because that other spouse is not going

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to know what to do with it and things are going to have to be done quickly.

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Whereas if the life insurance is there, it feeds in and now that other spouse

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has some money which buys time, right?

Speaker: 00:36:33

To make sure all that stuff goes the way it's supposed to.

Speaker: 00:36:36

So this is a bigger picture if we understand all of those

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ripples that occur as well.

Speaker: 00:36:41

Yeah, I mean that, that's the real life scenario that, we're, we've been

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talking about where, the, it's not an equation, it's not a percentage

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number, that's happening in real life.

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Same thing with business owners,

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selling your business isn't easy.

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A lot of people think they're going to, sell their business

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and retire on, on their money.

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And, but they're already accustomed to having a pretty high income.

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And it's hard to, it's hard to separate from that.

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It's hard to keep that going when it's time to sell your business,

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you need a qualified buyer and this, that, and the other thing.

Speaker: 00:37:11

So having that Having that certainty piece and having a, a way that, like you said,

Speaker: 00:37:16

to buy some time I think is just something that so many people are missing right now.

Speaker: 00:37:22

Yeah, and your analogy there with the business, with the other piece that

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happens here on the business that we see over and over again, that was the

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idea, they built the business, they've got great income, they're going to

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sell it at some time in the future.

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Now here's what happens in a lot of those scenarios, because

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there was no other prep handled.

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Every extra dollar they're dumping into their business rather than creating some.

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Other resources.

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And now they've got a kid in the business.

Speaker: 00:37:48

Right.

Speaker: 00:37:49

Okay.

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So this kid's joined the business.

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Now, what are you going to do?

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You're going to sell the business out from underneath this kid.

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So now you've got a real problem getting rid of that business, right?

Speaker: 00:37:57

And is that kid going to qualify for a loan to buy the business

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from you for its full value?

Speaker: 00:38:02

No.

Speaker: 00:38:03

Yeah.

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So there's all these pieces that need to be thought out upfront and we want

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to cover as much of that as possible.

Speaker: 00:38:09

Another place could be a temporary loss of job or or a disability.

Speaker: 00:38:16

What about a temporary disability?

Speaker: 00:38:18

For most people, even if they've got the maximum amount of disability

Speaker: 00:38:21

insurance they can have, it's only going to cover 60 percent of their income.

Speaker: 00:38:26

So are people saving 40%?

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In other words, if they were clipped down to 60%, is that going to be good for them?

Speaker: 00:38:32

Heck no.

Speaker: 00:38:33

They're going to be struggling on that and so their savings is going to disappear.

Speaker: 00:38:36

If we have the waiver of premium disability benefit on the life

Speaker: 00:38:39

insurance premiums, Those life insurance premiums continue to get paid on top of

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whatever our disability insurance is.

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So now then, our certainty plan still works out.

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Which by the way, usually it's only the base that's covered by those.

Speaker: 00:38:51

So another reason to, not ignore base premium when it comes to

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building up a, building a policy.

Speaker: 00:38:59

And we should say that all these people that are, that actually are planning

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to try to have some kind of legacy, meaning like the having the kids start

Speaker: 00:39:09

in the business and all that stuff.

Speaker: 00:39:10

It's it's so great, but I think people are just maybe a little unaware of

Speaker: 00:39:15

some of the real world challenges that can come in when it comes

Speaker: 00:39:19

time to actually do that transfer.

Speaker: 00:39:21

And the reason I'm saying that It's important to recognize that they have

Speaker: 00:39:25

the right mindset, but maybe just not the, all the knowledge is because I also

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talk to quite a few people that are like, I don't want to pass anything along.

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I want to, I don't want to give anything to my kid, and.

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And I, man, I have a hard time with those people too, where it's just

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what, really, that's your plan?

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I call it the save up, spend down mentality where Nelson Nash talked

Speaker: 00:39:45

about your plan shouldn't be 30 years.

Speaker: 00:39:47

It should be a minimum of 70 years.

Speaker: 00:39:49

And I think it should be even further than that, but this idea that you're

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just going to, Save up, a bunch of money and then spend it all.

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It's like, why were you even here?

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You know what I mean?

Speaker: 00:39:57

It's good job.

Speaker: 00:39:59

yeah, there's a couple of interesting things in that scenario.

Speaker: 00:40:03

And that is, for the younger person,

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Yeah.

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it's harder for them to...

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See the importance of that legacy.

Speaker: 00:40:10

And I've seen it with clients over the years that I've been 35 plus

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years, I've been in the business.

Speaker: 00:40:15

So I've seen clients in all phases and what happens to those younger clients

Speaker: 00:40:21

who said, I've earned mine, my kids can earn their own kind of mentality.

Speaker: 00:40:25

I've seen it in every one of them.

Speaker: 00:40:27

There's a switch that occurs out there in the future.

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Whatever age that is, 60, 65, somewhere along there.

Speaker: 00:40:35

And all of a sudden they say, you know what what if we don't eat every day?

Speaker: 00:40:40

Could we then save that money and give it to the grandkids?

Speaker: 00:40:42

They'll skip the kids and go to the grandkids.

Speaker: 00:40:44

But how do you tell a 30 year old, 40 year old that's going to happen to them?

Speaker: 00:40:48

It's just not something that's very understandable.

Speaker: 00:40:51

I've seen it over and over again.

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I've seen it to know that it's one of those things that occurs, but more

Speaker: 00:40:55

importantly, I think, is even if you kept that idea about, I don't want

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to give this money away to somebody else, having that death benefit in

Speaker: 00:41:06

place, This opens up all kinds of strategies that wouldn't be available

Speaker: 00:41:12

for more efficiently spending all your other assets during that distribution

Speaker: 00:41:17

phase, during that retirement phase.

Speaker: 00:41:19

So having the life insurance death benefit in place, man, it, it allows you to be

Speaker: 00:41:24

able to do some strategies and save some tax and do some other pieces, not for the

Speaker: 00:41:28

heirs, but for the individual who owns it.

Speaker: 00:41:31

And going through some of that and letting.

Speaker: 00:41:33

Letting a client see that this is a long term strategy and we don't want

Speaker: 00:41:37

to be locked into some path because we didn't have these other options, right?

Speaker: 00:41:44

Because one of the things,

Speaker: 00:41:46

I was just going to say, life insurance paired with other assets is always

Speaker: 00:41:50

going to make those other assets better.

Speaker: 00:41:52

Absolutely.

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I was chuckling because I don't know if you watch TV, there's a show on Apple

Speaker: 00:41:56

TV called For All Mankind, and it's a historical fiction about going to the

Speaker: 00:42:01

moon, at least in the first season.

Speaker: 00:42:03

And I was thinking of that's like what we're trying to do.

Speaker: 00:42:05

We're basically trying to plot a moon landing, But instead of

Speaker: 00:42:09

math and physics, all we have are probabilities and statistics.

Speaker: 00:42:13

And so we don't know where we're even going to end up by the time,

Speaker: 00:42:16

we maybe we'll make it to the moon.

Speaker: 00:42:18

Maybe we'll crash.

Speaker: 00:42:19

Maybe we'll make it to, maybe we'll go all the way to Mars.

Speaker: 00:42:21

We don't know.

Speaker: 00:42:22

We're such a cool analogy though, because that really is, as an advisor, the best

Speaker: 00:42:28

thing that we can offer our clients.

Speaker: 00:42:31

Is options, right?

Speaker: 00:42:32

It's the ability to shift because we absolutely know that whatever,

Speaker: 00:42:37

you're talking about the moon, there's people that are literally with the

Speaker: 00:42:40

financial plan, taking a BB gun and trying to hit the moon with it, right?

Speaker: 00:42:45

We know there's going to be wind, there's going to be all kinds of things

Speaker: 00:42:50

that aren't going to make that happen.

Speaker: 00:42:51

We have to have some target out there in the future that we're

Speaker: 00:42:53

working towards, but we have to have our assets in a place where we can

Speaker: 00:42:56

shift because we absolutely know.

Speaker: 00:42:59

Things are not going to remain the way they are today.

Speaker: 00:43:01

And so many financial plans lock people in a strategy that they can't move on.

Speaker: 00:43:08

And so if the environment changes over the next 40, 50 years.

Speaker: 00:43:11

Their plan's not going to work out.

Speaker: 00:43:13

So you said BB gun and it made me think, is that, did you pick BB gun because

Speaker: 00:43:17

most people are not saving enough?

Speaker: 00:43:19

So it's a, it's the amount of actual savings.

Speaker: 00:43:21

They're only saving like 5 percent of their income, whatever the number is.

Speaker: 00:43:26

Is there anything anything you'd like to share with any, do you have any

Speaker: 00:43:30

like events coming up or anything that you'd like to talk about or, other

Speaker: 00:43:34

advisors listen to this podcast as well.

Speaker: 00:43:36

What how can people get in touch with you and all

Speaker: 00:43:39

Yeah.

Speaker: 00:43:40

stuff?

Speaker: 00:43:40

The best place.

Speaker: 00:43:42

So my assistant Katie, as she's at either support@truthconcepts.Com or

Speaker: 00:43:47

katie@truthconcepts.Com and she can.

Speaker: 00:43:51

Really guide you and get you in the right position.

Speaker: 00:43:53

Also, I would suggest for advisors, go to truthconcepts.com.

Speaker: 00:43:56

We have a blog out there that's got tons of information, all for free.

Speaker: 00:44:00

You can just go spend all kinds of time there.

Speaker: 00:44:03

You can download the software.

Speaker: 00:44:04

Anybody can, doesn't have to be an advisor.

Speaker: 00:44:06

We have clients from time to time that download the software just to look at

Speaker: 00:44:10

some of the pieces and parts we've done.

Speaker: 00:44:11

It'll run for 30 days without having to purchase it, so it's in a trial

Speaker: 00:44:16

mode, so anybody can play with it.

Speaker: 00:44:20

My big thing is, I would love that group of advisors that you're talking about.

Speaker: 00:44:25

The people that we deal with in the industry, which is

Speaker: 00:44:28

an anomaly for the good.

Speaker: 00:44:30

I want to spread that.

Speaker: 00:44:31

I want to build a force where we get this back to where it was designed to

Speaker: 00:44:35

be really the type of planning, the type of advising that we're doing.

Speaker: 00:44:40

Is more traditional.

Speaker: 00:44:42

We've seen typical get in the way in the last, 30, 40 years, which has gotten

Speaker: 00:44:47

off course, but really life insurance as a solid foundation was the traditional

Speaker: 00:44:54

type of planning and wealthy people.

Speaker: 00:44:56

Most wealthy people have a ton of whole life insurance in their overall portfolio

Speaker: 00:45:02

and just like the businesses that you were talking about earlier with all the

Speaker: 00:45:05

cash so it's unfortunately the consumer, the small guy has been hurt by a lot of

Speaker: 00:45:13

the rhetoric that's out there and getting the message out there, really taking

Speaker: 00:45:16

an honest look at it from a qualified advisor, I think you're going to see it

Speaker: 00:45:19

be way different than what you expected.

Speaker: 00:45:22

That's great.

Speaker: 00:45:23

I'm in a several, groups and I, one of the things that I always tell them

Speaker: 00:45:26

is everyone in this group should have a Truth Concepts license and go to at

Speaker: 00:45:31

least one truth training per year because it's just, it's one of those things

Speaker: 00:45:36

you gotta, you have to keep doing it.

Speaker: 00:45:37

You gotta keep it.

Speaker: 00:45:38

It's like working out.

Speaker: 00:45:39

You got to keep using that muscle.

Speaker: 00:45:41

And that's the real way to creating in your mind a really solid foundation

Speaker: 00:45:46

on how, the whole truth behind how this money is working for everybody.

Speaker: 00:45:50

Todd, thanks so much.

Speaker: 00:45:51

This has been awesome.

Speaker: 00:45:52

I really enjoy every time we get to talk.

Speaker: 00:45:54

I really enjoy it.

Speaker: 00:45:55

So thank you for taking the time and appreciate it.

Speaker: 00:45:58

Same here.

Speaker: 00:45:59

I really appreciate you doing the right things and pushing the message out there

Speaker: 00:46:03

and making a difference in the industry.

Speaker: 00:46:06

Thank

Speaker: 00:46:06

you

Speaker: 00:46:06

so much.

Speaker: 00:46:07

Thank you.