Ohio National and Constellation

[DHK]

Just because YOU don't understand it... doesn't make it false.

I've got 6 CPAs and I've reviewed this with plenty of other advisors - INCLUDING the CLU program director at The American College whom I introduced to the author of the book.

It's sound.

Your understanding... is not.

And calling me names or saying I'm spreading lies when YOU lack the understanding and documentation... says something. I'll let you determine that.

 

[Tahoe Ray]

Amazon product ASIN 1495830713

I read that book and he uses a bunch of crazy assumptions too that in my opinion, aren't even reasonable, let alone applicable in a real planning scenario.

I own WL. I sell IUL and WL. The mental gymnastics required to do these "equity vs. life insurance" comparisons are just exhausting.

If you make enough money, just do both! If not, you shouldn't have the large, ongoing funding obligation that life insurance requires. To me, THAT is a major risk.

I have a great year, I can put a bunch of money into my non-qual investments. If not, I don't have to.

It is also a huge risk to assume that you don't need equity investments (or real estate, or anything that historically can "quickly" appreciate your assets) and that an investment that replicates bond returns is a replacement for that, favorable income scenarios or not.

 

[scagnt83]

Just because YOU don't understand it... doesn't make it false.

I've got 6 CPAs and I've reviewed this with plenty of other advisors - INCLUDING the CLU program director at The American College whom I introduced to the author of the book.

It's sound.

Your understanding... is not.

And calling me names or saying I'm spreading lies when YOU lack the understanding and documentation... says something. I'll let you determine that.

Ive been explaining your stance and your math to other people in this thread. Now you say I "dont understand" just because I disagree with the assumptions your math utilizes?


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You think your the only agent who has CPAs they work with? Or attorneys? Or who have had them review their math on stuff like this?

I have a working relationship with one of the most prominent tax attorneys in the nation. Along with multiple others.

I have a working relationship with multiple CPAs.... all whom specialize in business owners.

I have a working relationship with various advocates within our industry.

But I dont feel the need to bring that up in an effort to convince others I know what Im talking about.

I dont use that as an excuse not to back up my comments with facts and math and logic.

And I certainly dont tell clients my logic and math make sense because some random CPA or Attorney they have never met says so.

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I most certainly understand the math. Followed right along with every explanation you gave. Even assumed 10% withdrawal rate from the WL you were using... because I have run the numbers many times before that you are trying to massage to fit your scenario.

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You take offense to my comment. But I take offense to you using unrealistic scenarios to push a false narrative about a product that needs to exaggerating to sell. Its a disservice to this industry.

 

[pfg1]

I get where you are coming from, however tweaking all the parameters to make it look good isn't really reality. I have many many clients that got +40% or more in their investment accounts since Jan 2020. Some quite a bit more if they were aggressive. On that hypothetical $1.7m account you mentioned, the interest earned in just one year was as much as the entire amount of your hypothetical WL bucket. IN ONE YEAR.

That return is a REAL return and also includes the huge market drop for Covid, AND FEES. I know that isn't a normal year, but equities are the greatest wealth building tool for the avg american available. EVEN WITH FEES.

I love max funded WL in addition to a diversified portfolio... not instead of it. Using both together you get the best setup for long term success.

 

[Tahoe Ray]

Just because YOU don't understand it... doesn't make it false.

I've got 6 CPAs and I've reviewed this with plenty of other advisors - INCLUDING the CLU program director at The American College whom I introduced to the author of the book.

It's sound.

Your understanding... is not.

And calling me names or saying I'm spreading lies when YOU lack the understanding and documentation... says something. I'll let you determine that.

I have worked with 1000s of advisors who sell both life insurance and investments.

A lot of them do both. Some are biased to the life side, others to the investment side (it largely stems from where they learned the business from).

But, there is an inherent conflict when you can only write one and not the other. The RIAs (evil commissions) don't do their clients any favors by bagging on insurance as a valuable planning tool and the insurance-only guys (investments are "risky") don't either.

I can find dozens of CPAs who disagree with your CPAs, does that mean either one is wrong?

I just don't think there is a perfect or ideal way to do financial planning. It's not a competition.

 

[Allen Trent]

I already showed the equivalent rate of return that would need to be beat EACH YEAR is 11.5%.

but the 11.5 equivalent is based on 1.75% investment fees which are between 100% & 800% higher than the expenses of ETFs whether self directed, robo or a fee based planner involved.

Lastly, what is the average tax rate you are using, not the final marginal rate their last dollar might be in. Is it the highest federal & state ordinary income tax rate or an average tax rate or even better compared to Long term capital gains & qualified dividend rates.

The historical average dividend yield of the S&P 500 index itself is 4.31% & that is merely the historical dividend yield, not the stock price appreciation. That 4.31% itself taxed at an average qualified dividend tax rate of 0% for taxpayers under 80k taxable income, 15% for those from 80k-500k taxable income & only 20% for those over $500k taxable income per year.

I can make spreadsheets do almost any math I want, but it should be little more comparable to not use worst case taxes, more than worst case expenses, lower than average returns for the "other" product while ignoring that we cant guarantee the current dividend of the WL, cant guarantee the current loan rate of the WL (if currently charging less than max).

 

[Allen Trent]

I love max funded WL in addition to a diversified portfolio... not instead of it. Using both together you get the best setup for long term success.

Exactly this.. love all the products, but could never bring myself to tell people to stop putting money in 401k completely, dont do a 529 & put it in life, borrow equity against house & put it in life, etc, etc.

 

[scagnt83]

The historical average dividend yield of the S&P 500 index itself is 4.31% & that is merely the historical dividend yield, not the stock price appreciation. That 4.31% itself taxed at an average qualified dividend tax rate of 0% for taxpayers under 80k taxable income, 15% for those from 80k-500k taxable income & only 20% for those over $500k taxable income per year.

I can make spreadsheets do almost any math I want, but it should be little more comparable to not use worst case taxes, more than worst case expenses, lower than average returns for the "other" product while ignoring that we cant guarantee the current dividend of the WL, cant guarantee the current loan rate of the WL (if currently charging less than max).

Exactly.

Reducing non-guaranteed Dividends by just 20% (5% to 4%), but exaggerating numbers on the investment side by 50%-100%.... is disingenuous at best.

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Again the issue of Qualified Dividends being tax free while under $80k in taxable income is just being ignored.

 

[scagnt83]

I already showed the equivalent rate of return that would need to be beat EACH YEAR is 11.5%. Show me an investment that will do that on an almost guaranteed basis... and we can compare that.

How about we compare WL against a portfolio of Dividend paying stocks, with a client who has $75k in taxable income from SS and other sources?

 

[scagnt83]

Just thinking out loud here David.... you admit the equities build a larger pot of money.... I admit that the WL provides a higher payout rate....

So.... would the ideal plan not be buy convertible term, invest difference, and then convert 10 years from retirement and put the equities into the WL at that point? I mean, why put $400k into WL when you can put $1.7m into WL?

Obviously its not as cut and dry as that. But the real answer is that nothing is the one single answer. Asset diversification is key to a safe retirement. Even diversification within the same asset is smart... such as not putting all your eggs in the same WL product, or IUL product, etc. Clients can get one of each, one from each carrier, etc. And that is a very smart thing to do as we all see from the current ON debacle.