Marketing Spin – Episode 053

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[00:01] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, bestselling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome to another edition of the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. Once again, we have my co-host and bestselling financial author, Kim Butler with us. Welcome, Kim. Hello Todd, so happy to be here today. We’re middle of October and I’m not sure when you’ll be listening to this, but just coming off a fabulous event for advisors and happy to get back to talking about things that help our clients. Super. And yeah, like you mentioned, there’s a lot of common topics that came up at the

[00:51] event that we just attended. And one of them is what we like to refer to as marketing spin. Kim, I’ll kind of just let you define what marketing spin is in the financial world and then we’ll talk about it a little bit. Absolutely. And it’s all over the place. Many of you are very aware of the Palm Beach Letter and we love the Palm Beach Letter and how much good they’ve done in introducing people to a variety of thinking about their money. But because they are a authorship, they are a newsletter, they are a publishing house if you will, their copywriters come up with more names for whole life than I have ever heard in my whole life. And this really started long ago with the infinite banking concept.

[01:44] So I’ll just rattle off here a whole bunch of marketing spin that are names for a almost 200 year old product called Whole Life with a Paid Up Additions Writer. And part of the reason that we’re talking about this is so that people know them when they hear them and they don’t get confused about, oh gosh, is that something new or do I need that in addition or worse instead? Because you had the whole life product and yes, it’s boring, but my gosh, is it effective? And then Nelson Nash came up with the infinite banking concept, which was just using whole life. And then Pamela Yellen came up with Bank On Yourself, which was just using whole life. And then the Palm Beach Letter came up with the 770 account, which is

[02:31] based off the tax code of whole life, 7702. And then they started coming up with like this 701J and a 70 account and a 770 account. And then they called it the Reagan account. I mean, it was comical listening and watching and reading all of the various titles that came about for a very simple product, whole life insurance, which is just a place to store cash. And then the Paid Up Addition Writer is just extra cash. And then the idea of borrowing against it has been around forever and ever. And I really give credit to Nelson Nash and some of the other people that are putting this information out there. They’ve gotten our society to think differently about this age old product. But on the other hand, the way that they write about it makes it confusing.

[03:27] And when you apply all these different terms to it, it just ends up making it more confusing. And I admit I am guilty. We did that in our practice for a while. In fact, we used to call, Todd, are you ready for this? Do you think I should really reveal this? This is almost embarrassing. Yeah, I think if you’re going to tell the whole truth, tell the whole truth. OK, we used to call a whole life policy with a Paid Up Addition Writer that was heavily front loaded, the super squish. And I just I’m glad it provides some laughter. But holy cow, really? So I’m just as guilty of coming up with these fancy names. But it is spin. It is putting out their terminology that is confusing and it’s not helpful.

[04:20] And so, as Todd said, we’re here about providing the whole truth and providing it as black and white as possible, because that eliminates confusion. And so I’ll also admit I used to shy away from even just using the word because it had such a negative connotation in our society. But you know what? The product works. So let’s call it what it is. Whole life insurance. Let’s refer to it as it should be, which is a place to store cash. And obviously, it has a whole bunch of strategies that go with it. And that’s an important distinction, too. I think we have the product and then we have all the strategies and strategies are things like borrowing against it. Things like using the death benefit while you’re living.

[05:10] I could go on. I mean, I’ve probably got 14 strategies that we use with whole life insurance. But I think that’s for another podcast. So what other things have marketing spin? I agree. I would like to point out one thing, though, and I don’t think it was necessarily a totally negative thing. I mean, there’s a lot of people whose eyes just glaze over and stop listening at the term life insurance because they associate life insurance with a death benefit only. So even calling something the super squish or whatever you came up with. I mean, if it got people to listen and to become educated. True, it may have had a marketing connotation behind it, but it did get people to pay attention. And I think Palm Beach especially has done a great job of that,

[06:04] of maybe getting people who ordinarily would not have even think of buying life insurance to understand the living benefits. So I’ll give you credit for the super squish. Well, and I totally agree with you. I’ll give Palm Beach and everybody else out there that’s come up with their cool marketing terms credit for it. I just am grateful that in today’s world, we can say, okay, here’s the real term. Here’s the real deal. Here’s the whole truth. And alert our client base that we do need to be aware of some of these marketing terms. And yet we also need to dig a little bit deeper and figure out what the whole truth is behind them. My husband Todd Langford has an awesome saying that goes along with the, it sounds to be good to be true.

[06:55] So if you say, it sounds too good to be true. He says, well, then let’s dig a little bit deeper. Rather than just casting it off as, okay, if it sounds too good to be true, then it must be too good to be true. Let’s dig a little bit deeper because when you think about some of the inventions in our society, the light bulb, electricity, cars, mobile phones, I could go on forever. All of those things sounded too good to be true when we first heard about them. And now, thankfully, thankfully, there is just so much awesome new technology that is causing things to be put forth and actually work and be available and not be, quote, too good to be true at all. And that’s definitely something that’s very accurate

[07:41] about whole life insurance is it is boring, it is effective, and it does not provide us any concerns in the, oh my gosh, this sounds too good to be true department. One of the books I just finished reading was a book about standard oil and standard oil for years put all kinds of literature and messages out there about how electricity was going to burn down people’s houses because houses were heated, are lit with oil lamps and they obviously dominated the oil industry and that electricity was a fad and would never come to fruition. And so same type idea. And I think that’s the other side, the negative side of marketing is that these companies have gone out there and they’ve reached out to the public with these educational messages,

[08:39] which is good, but they’ve paid money to do that. So they wanna try to create the unique brand to protect themselves to make it look more unique as the flip side. Absolutely and thankfully in today’s very transparent society, we as consumers of information can dig through things a little bit further. And maybe you check out the article that you read on the internet on Snopes so that you know for sure whether it’s accurate or maybe you do your own research or maybe you ask a couple experts in the field and get alternative opinions or what have you so that you dig through the marketing spin and get figured out what it is that they’re really talking about. There’s another one that I wanna bring up

[09:28] on the spin side and that is this concept of alternative investments, which of course we talk about all the time as things not in the stock market. And yet the brokerage community, the stock and bond brokers, they wanna talk about REITs and some of their other more strategy-oriented products as quote alternative investments where in actuality, they’re really just right back into that stock or bond market. So I think that side of the table, if you will, has a lot of marketing spin that goes along with it as well. In fact, another Todd Langford story, he loves to say and they call their investment a security because it’s typically called securities and yet when we really think about the word security,

[10:20] securities as in stocks, bonds and mutual funds usually have very little to do with actually being secure in terms of maintaining principle and that kind of thing. So just some other terms that are out there for marketing spin. Can you think of some additional ones? Well, I think the biggest buzzword out there right now would be non-correlated or uncorrelated investments. Absolutely. So we throw a definition out and I’ll add to it. Well, once again, we’re talking about investments that operate independent of the market. So if we look at the stock market, there’s basically three major divisions. You can be holding your money in cash, you can be holding your money in bonds or you can be holding your money in stocks

[11:07] and there’s movement between those three and a non-correlated or uncorrelated investment in my mind is something that would run independent of the ebb and flow of money going in and out of those three areas and certainly the one that comes foremost of my mind is life settlements. Absolutely and as our listeners know, we love life settlements as both an alternative investment and a non-correlated or uncorrelated asset because it moves completely independently of the stock market. And frankly, I would put whole life insurance in there as also an equal alternative cash spot, it’s not an investment but alternative cash and also uncorrelated because I get clients that have owned whole life for five and 10 years

[12:03] still asking me, well, what happens if the stock market crashes? Absolutely nothing. It’s completely disconnected to it. What happens if interest rates go negative? Did you know the Fed’s talking about making the interest rates go negative these days? I heard that at the event that you and I both attended and I’ve tried to picture how that would look in my mind and I still can’t wrap my head around it to be honest with you. I think we’re going to have to pay to put money in a bank and so clients will ask if the potential of interest rates going negative will affect their whole life. No, because the cash value is not in a bank, it’s in a life insurance company which reserves its money dollar for dollar

[12:45] as opposed to the fractional reserve system that the bank uses which is five to 10 to 15 cents on the dollar depending on who you talk to. So it’s just an interesting thing that we have to be aware of. The marketing message, I’ve gotten to the point where I always look at the author, who’s writing, who’s speaking, who’s doing the talking or the sharing of the information and that helps me become immediately aware of any bias that that person might have and I’ll readily admit our bias and at least mine personally is stuff that works. I want cash that will not go down and is totally liquid. I want investments that have the potential for double digits without the loss of principle. I want something that creates income

[13:35] that will absolutely create that income every single month unaffected by the stock market and so many times we’ll throw the word market out there and even that word can be confusing because we need to be clear on whether or not we’re talking about the stock market when we say market or the market as a whole as in our economy as a whole and again we’ll get client questions. Well, what happens if the stock market goes down in my whole life insurance policy or my life settlements or even my bridge lines? The answer is nothing but then there should be a corollary question of that and that’s what happens if the economy goes down if we have another recession, depression, the myriads of words that they come up with.

[14:23] Boy, talk about marketing spend. That’s another one, isn’t it? Well, and it’s possible to cross lines back and forth as well. I know I had invested in what I thought was some major malls across the country and they were very profitable but it was invested through a fund not a traditional stock purchased fund so that even though it was totally based in real estate it was liquid and traded on the market therefore it was affected by the market crash of 2008 even though technically my purpose in investing in that asset class was to try to avoid that but because of the way I went about it I ended up being in something that was market driven stock market driven anyway. Yeah, that’s my big challenge with the REITs

[15:22] is that people think they’re in real estate then and they’re not. They’re still right back in the stock market. So just something to be aware of, something we need to dig in, check the author, check the source, look behind the language and keep clear the difference between products and strategies. I think that’s a really important item is get clear on are they talking about a product like whole life insurance or like life settlements or like bridge loans or are they talking about the strategy like borrowing against the whole life or using the life settlements as a Roth IRA conversion and getting a discount or the bridge loans and whatever strategy might be around the creation of income. Products are things that we buy

[16:09] and strategies are things that we do and when we get clear on that difference I think it helps us a lot cut through the marketing spend that’s out there in the world and not being confused by it because we can learn from it but we certainly don’t want to be confused by it. Absolutely and I would say that there are a lot of companies out there who have done this marketing spin as a way to help educate and there’s probably an equal number of companies who have done this in an attempt to deceive or to hide what they’re really selling and really truthfully if you listen closely to the first couple conversations that you have I think you can distinguish which one of those companies you happen to be working with.

[16:54] Absolutely. Well we certainly hope that this has been helpful today and it’s something that we’ll continue to chat about and we have available for anybody that would like to have some perspective on the marketing words that are out there. Boy another one is the certified financial planner designation which I got rid of in 2008 and am grateful to not have to really be abiding by the six steps of a financial plan because I do not feel that they’re helpful and we talk about why in our ebook that is titled Financial Planning Has Failed and it is available to you as an audio. Partners number four prosperity.com slash ebook probably about two hours I believe and read by yours truly and happy to provide that.

[17:44] Anything else you want to add Todd? Nope I think that’ll wrap us up. This is No BS Money Guy for the Prosperity Podcast. Once again thanks again Kim Butler and take care everybody. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you visit us at partners4prosperity.com. If you liked this episode make sure you subscribe and leave a review.