Real Raw and Relevant – Episode 154

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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 the Prosperity Podcast. This is No BS Money Guy, Todd Strobel, and we have the president of Partners for Prosperity with us today and my co-host, and we’re going to be talking about a subject called Real, Raw, and Relevant. And we don’t often time stamp our podcast, but we’re post-election, Donald Trump has just won the election, he’s not taken office yet, and we are noticing probably more sitting on the fence trying to decide what to do than at any point in my 20-some year career.

[00:59] How about you, Kim? I agree, and I know from your conversations with our estate planning attorney that there are a lot of people sitting on the fence as it relates to getting their estate planning documents done as well. And it’s just not necessary. There are things that we can do that we should always be doing, regardless of who’s in the presidency, regardless of which party controls the House and Senate. It’s so important that we take action, and it’s one of the things that we really strive to help our clients to do, and to take them quickly. I think so many people really, especially around the financial world, get stuck in analysis paralysis, and it always cracks me up. Just take something like the life insurance.

[01:45] Whole life insurance as a product has been around for just about 200 years, and people spend ridiculous amounts of time analyzing whether or not they should buy a product that has been around so long and proven itself over and over and over and over again. And I just feel strongly, okay, yeah, you know, ask your questions, analyze a little bit, but take action. A lot of times we get better results just from taking action than we do from continuing to stew about it. Take action and move on. Go, you know, put your brain power, use somewhere else. I think of one particular client that we’ve had that has been on the fence now for a year earning 1% on $1 million versus an actual 14% return that he would

[02:38] have received on that same million dollars had he pulled the trigger a year ago. And now think of what, you know, this is a 45-year-old person. Not only has he lost, gosh, do the numbers on that, $100,000, but the interest on that $100,000 that he would have earned for the next 40 years. Yep, and the mental anguish of, oh, should I pull the trigger? Oh, should I not? One of the things that we tell our clients all the time is go slow and start small. And so this gentleman was given that suggestion as well. Don’t try to put your million dollars in. Put $100,000 in and go slow and start small. Go slow and start small or start small and go slow. However you want to put it. And yet not everybody is able to have the guts to take that step.

[03:30] And it’s really important that people take action, take action, take action. And if they’re not going to, they need to look at why. And it’s fine with us. We’re not being overly aggressive in pursuing people if they don’t want to take action. But just for your own good, you’ll want to take action. That’s one of the first meetings that we have is that, you know, we want to conclude each meeting with a yes or a no. Either is acceptable, but maybe we’ll kill you. Right. Okay, so here’s a question that I have for you. And that’s that we are bombarded with information. We have access to information like never before. But yet we’re not seeking information. We’re technically seeking wisdom. How do we separate information from wisdom?

[04:27] Oh, that’s a great question. So it goes right back to what we were just talking about. Wisdom provides actionable items. Information just provides information. Wisdom adds to information steps for you to take, even if they’re baby steps. So that you can get the results of that information. It’s funny. I just started reading Tim Ferriss’s new book, something about titans, the habits, practices of titans, something like that. We’ve got an upcoming podcast about books that will be fun. And one of the things that he says is the only material that is in this book are things that people can take action on. It’s called tools of titans. And that’s what we want to do in our work as well, is give people the wisdom to take the action.

[05:29] And I think wisdom is very closely related to the word advice. And Partners for Prosperity is an advice-giving firm. We have a federally registered investment advisory firm that is there to give advice. And so many financial advisors try to educate people on their options, which is really giving information. And then don’t get clear on the action steps to take. And that’s where people get hung up. If there’s not clear action steps to take to implement the advice. And, uh, Kim, you, you have a, uh, kind of a little special gift for our podcast listeners only that kind of addresses that. Absolutely. So the, the book is, uh, called financial planning has failed. That’s what you’re talking about.

[06:23] Yeah. Yes. And inside financial planning has failed. We give information, but we also try to add the wisdom around that information so that you know what to do. In fact, all of our books are written so that you know what to do. And it’s the doing that’s going to get you financial results. So the book is available only at partners. Number four prosperity.com slash ebook. That’s partners, the number four prosperity.com slash ebook. And there’s an audio version as well as a PDF immediate download. It is not available on Amazon. And so I realized that may be frustrating to people, but it does show up as a PDF. So you can still read it on a Kindle or an iPad or whatever you got. And we’ve made the book structured the way that it is so that we can continue to reach

[07:21] out to you to provide information and wisdom. And again, the wisdom is the advice steps that you need to take. Now, a lot of financial decisions are very, very personal and they need to be provided with very specific advice based on that person’s situation. But there’s also a lot of financial information, especially in what I would call the alternative investment space that is pretty straightforward that anybody can go take and implement. And I’ll just lay it out right now. In the alternative space, there’s three components. The first is a place to store cash because everybody uses banks. And the alternative is cash value of life insurance. The second is a place to create income. Everybody wants to use annuities or dividend paying stocks.

[08:12] And the alternative is the bridge loan environment. And then the third is getting your money to grow. And everybody wants to use stocks, either gross stocks or value stocks. And the alternative is the life settlement arena. And so inside financial planning has failed. We cover wisdom about these three alternatives. And just to kind of give an example, you know, I was scanning through some information today and sometimes I find myself going down rabbit trails. But I mean, there was a notice that the return on 10-year treasuries just ticked up to 2.1. That’s an immediate ignore. I mean, I know we’re in a 4% to 6% inflationary environment. So my money’s going backwards at least 50%. You know, who’s going to be president and what’s the first thing they intend to do

[09:10] in the investment environment? That’s something I’m probably going to read. How many texts Hillary deleted? Don’t really care. And then basically for Kim Butler, I had to read the fact that the largest underground oil field in the world has been found in Texas. Have you been following this? I have not, though I’m not surprised. So yeah, that’s fabulous. And I love what you said. Let’s start feeding our brains. You used the term a couple podcasts ago of mental nutrition. Let’s start feeding our brains with things that we can control. So let’s go back over what you just popped up. Well, the Treasury issue, we can control that. We can put our dollars in the life insurance arena that’s actually going to earn 3 or 4%.

[10:01] So it’s at least keeping pace with inflation. And I want to point out that 3 or 4% increases as interest goes up. My 10 year treasury is locked in at 2.1 and it’ll be 10.2.1 even if interest rates go to 25. I’m very well said. Yes, very well said. So we can do something about that. And we can do something about where our emergency slash opportunity money is stored. And then the whole Clinton email thing, not only can we not do anything about that, but the election is over. We’re done. And I realize there’s still some talk about there, about other countries and this and that. Let’s move on. Let’s focus on things we can control and take action on things that we can control, which is then turning to these other two investments that we talk about so much

[10:54] because neither one of them will be affected by what happens if we have a stock market meltdown or what happens if we have an overall economic meltdown because the bridge loans are cash flow focused. I get this question all the time. What happens if we have another 2008 and some kind of real estate bubble? Our bridge loans are focused on cash flow. They do not care what the value of the underlying real estate is. So if the value goes down, well, of course, yes, there’s always a risk that the borrower might not pay the payments. These loan to value ratios are so low that even if the value went down, the property could still be sold. We’re focused on the cash flow from the property, not the value of it up or down.

[11:50] And then again, as we’ve mentioned, the life settlements, of course, are completely unaffected by a stock market meltdown or an economic meltdown because as we all know, death is a guaranteed event regardless of what’s going on economically. People are so benefited by turning their thought and their reading and listening time away from that that they cannot control and instead eating up mental nutrition of things that they can control and learning about these things. Even if you’re not ready to do anything with the money yet, you’ll benefit from learning about them and the confidence that it gives you in knowing that there are other things out there that you can put your money in that will not roller coaster ride.

[12:39] One thing I would like to just add in about the bridge loans is that the bridge loans are investing in a short term real estate environment. And in the event they see a turn in the real estate market, they are willing to pay back all investors and just find somewhere else to make money. Absolutely. And a lot of these deals are, as we’ve indicated, very low loan to value ratios and so consequently very protected. And some of them have a huge win-win in the additional element of what I would call community investment, just doing good in a community. And so that’s a fun thing to be aware of as well. And they’re just nice alternatives to at least learn about at a minimum. Even if you then take that information and go find some of your own deals

[13:34] in your own local marketplace where you feel like maybe you have even more control. My goal for this particular podcast is that there’s somebody out there who has been sitting up nights or putting eight to 10 hours a day and on the internet trying to somehow another monitor everything that can cut that back to an hour of important stuff and then sit three hours in the park with their kids. Yes. And isn’t it wonderful on our side, on the advisor side, we as advisors don’t have to worry about getting a whole bunch of phone calls if the stock market goes up or down or sideways or getting a whole bunch of phone calls if something happens from an economic standpoint because the investments that we work with are not affected by that.

[14:23] So we too can go spend time with our kids in the park or the alpacas in the barn or whatever else it is. There’s so much better use of your time rather than constantly monitoring for fear of your assets decreasing. I want to just add one thing before we wrap up and that’s in 2017 in October all insurance agents and financial advisors are going to be required to follow the fiduciary rule. This is a rule that we have been mandatorily following because of our series 65 license for the past, what, five, 10 years already? Yes. And the 2015 White House Council of Economic Advisors report has indicated that this change is going to provide $17 billion a year in excess commissions where advisors chose products for their clients

[15:28] based upon the commissions that they make, not what’s best for the client. So this deal that we’ve been following for 10 years, once it becomes mandatory for everybody, is going to provide an extra $17 billion a year in the investors’ pockets. And there’s no way for us to tell, but I mean, think of the money that we’ve been able to put back in our investors’ pockets because we’ve already been doing it. Absolutely. I’m guessing that where they got their calculations on that is things like a mutual fund that has a front-end load of four or five percent and almost all the investments these days are going more to the annual management fee. And then of course, as we know, annual management fees have been coming down,

[16:14] where 2% was common, now 1% is more common. That’s probably where they got those calculations. But isn’t it nice to know that our structure requires us to put the client’s best interest forth first and always has been. Partners for Prosperity has followed that fiduciary guideline since 1999. The last 10 years or so, whenever the DOL has been working on their part, have just been of interest to us because of what other advisors are being looked at. And if you’re dealing with an advisor that is from a typical brokerage house, then they are probably not being required to follow that fiduciary guideline. And though they may try, and this is no statement on an individual advisor or even an individual firm, it will be nice to know that the playing field has been risen

[17:11] and that the bar is now higher. And that, in theory, at least according to this rule, and if it does go forward, and I realize there’s still some negotiating going on, that everybody will be forced to raise the bar. But we’ve already been there. And so we’re grateful to have already made sure that in all cases, we’re recommending the best thing for our clients, even if it’s a product that we don’t sell. Awesome. Well, again, if anybody has questions or you’d like to have a question answered on our show, it’s hello at partners, the number four, prosperity.com. Again, this is No BS Money Guy, Todd Strobel. Special thanks to Kim Butler. Special thanks to our listeners. We are so grateful that the number of downloads just continues to grow and grow.

[18:03] And this is your show. So tell us what you want to hear. Take everybody. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.