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I really think if you read Dr. Belth's article, you will gain so much insight into the original issue of fractional premium cost disclosure that I raised.
Perhaps I need to do a better job, or a follow-up post to my article, that provides some context to make it so that people don't just go punt their policy because they see "42.8% APR" and freak out. I will commit to giving that some thought.
I do still think there is value in sounding the alarm on things like this. You may disagree that this information is too much, or overload. I think, in its proper place and context, it is useful. And I think trying to spoon feed or filter what we do and don't think the client needs can be very dangerous road, especially when such huge profits are at stake. Like I said, the profits from Primerica's practices of encouraging the monthly payments are enormous. Can we really trust them when they say, "the client really doesn't need to see the effective rate we're earning here. It's just going to confuse them?"
It's just my position that it needs to be disclosed as a matter of course when a client chooses his premium mode. I think it is the respectful thing to do. I think the industry fights doing this because it is wed to the disguised profit center, at the consumer's expense. And I just flat out think any arguments to the contrary are, at best, silly. That's just what I believe. It is not an attack against you or any one person. It is an opinion about the entire industry in this one particular area. I stand by it.
I certainly have not, nor will I be, reporting up to the insurance companies that I show their modal costs as an APR to policy holders. They have fought such disclosure vigorously. Why would I want to bring myself under that scrutiny when I am only doing what is sensible and fair for the client? Because it's "the law?"
Yeah, well at one time it was also "the law" in Germany to turn in Jews. I am not trying to go all self-righteous here because, as I've already said, God knows I've made mistakes on this very thing for many years of my career. But they were uninformed mistakes. That is my only remote defense. I did not know I was hiding something important.
So, now, I disclose it. It is an inconvenience to do so. It adds work, albeit a small amount of work, to each transaction. But I truly believe it is the right thing to do. It gives the client the best information to make a decision for how to pay for his/her policy.
And yes, I think it does provide a window into the character of an organization. So if what I've posted on my site has the effect of steering folks away from Primerica, I'm not at all displeased with that. Of course, I wouldn't want them to go cancel an existing policy without a good, justifiable replacement. But I do think that Primerica should be avoided if it can be. That is my opinion. I'm not bating anyone or twisting anyone into a policy by expressing it on a web forum.
I can see why the comments about cash value insurance would strike you as a troublesome. But if you'll look carefully, you'll see that I did not say that my analysis ALWAYS will help blow up cash value policies. I am responsible in the way I conduct this analysis. There have been occasions when the analysis I've done strongly suggests that a client should remain in a whole life policy, even if he/she might not have been best served to buy it in the beginning. I understand those nuances. I am not Dave Ramsey, here.
That said, in general, I happen to believe that most cash value policies introduce complexities that are costly to deal with for both their owners and the advisors trying to incorporate the policies into a financial plan. In general, I think that if they can be blown up responsibly, they should be. So I don't hesitate to provide that counsel when I believe its the right thing.
And it just so happens that (surprise, surprise) many folks in the fee-only planning and AUM world tend to appreciate that perspective. It frequently dovetails with the types of assets they believe are best for the client, work best in their financial plans. I don't think it's a conflict of interest for me to state my product bias because it happens to align with the views of most the advisors I court for business. I genuinely believe what I believe. It's not like I'm shape-shifting my opinions just to score votes or referral sources.
Now if you mean that the conflict of interest is that I get to sell a term policy by blowing up a permanent policy, I can see how that might concern you. Especially if you've experienced the reckless replacement empire of Primerica.
I don't know what to say except that's just not how I roll.
If you really want to audit me, then shoot me an e-mail at [email protected]. I will shoot you a PDF of the last whole life replacement analysis I did, sans names of course. And you'll see for yourself that it was quality work, impartial, and in this case actually counseled the client to keep the policy (which was a well-designed, overfunded WL contract with NYL that was in its fifth year). Both me and the client's advisor sat there trying to tell the dude not to cancel it. But nope, he was adamant. He wanted to cancel.
And sure, I was there to put him into a good term policy. Conflict of interest? Sure. But the problem is not having a conflict of interest. A fiduciary commitment discourages conflicts of interests, but it does not preclude them. The language is very clear: they must be acknowledged and disclosed. The client must provide informed consent to the conflict. That all takes place within the scope of what I do for each and every deal. It is definitely a pain in the ass at times. But that's the price of doing business this way. I accept that. And it is getting easier as I go.
The market niche I'm occupying is very contrarian within the industry. I recognize that. I suppose, in a way, I'm inviting this type of reaction when I post on this forum and draw any attention to my site.
Lesson learned. I need to keep a lower profile.
I really am not kidding when I say that you'll probably see no more backlinks from me on here anymore. Or at least far fewer. This has truly been an eye-opening experience. And the stuff you wrote really scared me. You sounded like someone who would report me to a state regulator. Or someone who'd try to make my world miserable by disenfranchising my appointment contracts with my carriers, which would seriously (temporarily) disrupt my practice and my service to many clients.
And I would definitely defend myself vigorously if anything like that were to take place. Not out of spite. Just out of self-protection.
I do appreciate you clarifying your position to exclude the harsher accusations. I can live with "misguided" and even "***." The other stuff - the rebating and twisting stuff. That was very disconcerting.
OK. I'm definitely ready to be done with this if you are.
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