Pulling Back the Curtain – Episode 040

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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 today. Hello Todd, glad to be here today. You know, I’m actually going to share some things on today’s podcast that I don’t talk about very often because when I get a client on the phone, my focus is them and their issues. I don’t really like to talk about what licenses I have or how our business is structured

[00:46] because I don’t think that’s very relevant most of the time. But every now and then a client will be curious about the behind the scenes aspects of the business. And even more fun is every now and then a client is actually interested in coming into the business, actually being a prosperity economics advisor. So I thought we would just do a little call in layman’s terms about what that’s like and what our days are like and how we help people and the licenses that we have and that kind of thing for our clients that are interested either just in knowing a little bit more about our practice or possibly even in being a prosperity economics advisor themselves. It’s amazing. You can look into somebody’s eyes as they find out about prosperity economics

[01:35] and some of them will kind of turn gray and dismal because this is just not a conversation. They just are not going to be talking about money. But then there’s the opposite side of that where people get so excited that they become prosperity economics evangelists. I mean, they’re out there talking about it at lunch or wherever anyway. So why not turn that into a business because it’s clearly where your passions are. Absolutely. It’s funny. I just had a call with somebody like that this morning. And I said, if you get excited about our blog posts and the various things that we put out there and the various investments that we have and storing cash and cash value life insurance, then you have a good match here with this as a potential business.

[02:27] If you don’t get excited about it, then you probably don’t. And so, yes, what you’ve said there is a very good clarity. So let’s just start with some basic things. And that’s the first is that we have a life insurance license. So anybody can get that. It’s a piece of cake. And it’s a little bit of money and a little bit of time. And you take a class or do it online and then you take a test and you have your life insurance license in the state that you live in as a residence license. And then, of course, it’s fairly easy to add non-resident licenses like we have in all 50 states. Most advisors are not going to do that, but we’ve practiced nationwide for a long time. And just over the course of time, we ended up with all 50 states.

[03:06] Didn’t happen overnight. But you can get your resident life insurance license for I don’t even know, and maybe another three or four hundred for a class or something like that. And away you go. You can sell life insurance. And I doubt that anybody wakes up on a particular day and says, hey, I want to sell life insurance. But for those of you that are curious, that’s how it’s done. And then the other thing that is helpful to know about are the two alternative investments that we work with. And both of them are available to be sold or for you to help people buy is the better way to say it without any specialized license. Now, there’s some education that’s needed. There’s some training that’s needed, but there are not specialized

[03:52] requirements for the alternative investment arena because we’re not selling individual stocks or bonds. The series seven is not needed. Series seven is what your typical stockbroker has. And the actual alternative investment arena, because it’s not in the stock market, doesn’t require that. So the ability is there. If somebody is interested, that is something that we can help them make the contacts to have the resources available to them so that they, too, can help their friends buy whole life insurance and term insurance, of course, and the two alternative investments that we’re such big fans of the life settlements and the bridge loans. So that’s the basic structure. Financial advisors are typically self-employed or full commission,

[04:44] and the failure rate is relatively high. How would you feel this compares with a prosperity economics advisor? Well, it’s a really good question. We’re still going to be self-employed and the ability to earn a living is dependent on how many people you can help and how thoroughly you can help them. So clearly, because of the broad offering that we have, I think it makes it fairly easy for a new advisor to get up and running. But our biggest challenge, and this is true across the board, is finding new people to help. And so people need to be aware if they’re interested in this business that that’s the number one issue is finding new people to help. And so assuming that they can and they have a broad offering,

[05:31] it’s a very lucrative business, a very enjoyable business for the right person, because it enables you to help people all day long. Now there is, you brought up the area of commissions, there is an additional way that Partners for Prosperity does help clients and consequently gets paid to do so. And that is with a license known as a Series 65. Sometimes a Series 66 in combination with some other things can do the job, but I promised layperson here, so I’ll keep it simple. And a Series 65 is known as an investment advisor representative on the individual side. And then the corresponding company, like Partners for Prosperity in this case, is a registered investment advisor. And so this is a legal structure.

[06:22] The Series 65 is a license that you get, and then the registered investment advisor is a legal structure that, again, can either be done state specific, where you live, or federally like ours is. And it is what allows you to give financial advice. So the other products that we talked about are more in the commission arena, whereas this is an advice license. And people need financial advice or financial strategies, if you will. In addition to whatever products they may or may not buy. And so inside Partners for Prosperity, we have a five-step prosperity pathway that is what we take a client through if they want full-on advice and strategy around every single thing in their financial lives. So literally, we’re talking about car insurance and home insurance

[07:22] and liability umbrella and social security and all of their various health insurances and disability and life insurance and wills and trusts and savings accounts and CDs and checking accounts and budgeting and IRAs and mortgage payments and college education and life insurance and investments and stocks and bonds and mutual funds and et cetera, et cetera, et cetera, et cetera, et cetera. That is what many people would call going through a financial plan. But if you are a listener to this podcast or a reader of our materials, you know that we really don’t like that word. And the reason that we don’t is because it’s very hard to plan somebody’s finances. However, we can absolutely take somebody through a process

[08:09] that looks at their entire financial picture and takes into account everything that they’re doing today and makes all of those dollars work as hard as possible today. That’s financial strategy. And so at Partners for Prosperity, as I said, we have a five-step process that we take people through. We charge a fixed fee for that kind of depending on the situation and it enables people to know that they are paying for advice completely separate from any product, completely separate from any company, completely separate from any bias. And we hold the fiduciary responsibility. A registered investment advisor operates under the fiduciary standard, not the suitability standard. Do you want to explain those differences real quick?

[09:02] Well, to make it as simple as possible under the fiduciary standard, you are required to give the best possible advice of all products and situations known and unknown to you. So if the client can prove that there is an investment option that you should have known about and didn’t, they have a potential claim against you. Under suitability, it’s basically do no harm. So as long as what you did was in the best interest of the client or maybe not the best interest, but it served the client’s purposes and you did not intentionally try to mislead or deceive, you’ve met the suitability case. Clearly, it’s much higher and much harder to have the series 65 or however you want to term that. But I think it’s well worth it on the client side

[10:05] because you want that protection. Absolutely. And so Partners for Prosperity is operated under the fiduciary standard, which is the higher standard for many, many years. And it is something that we recommend that people adopt that standard and take the steps necessary to operate under it because that enables us to legally have to provide our clients the best thing for them, whether or not we sell that product or not. So again, just in our big picture here of helping you as our client understand the business and what the opportunity is there if you’re curious about it to get into it yourself or have somebody else get into it that you know of or if you’re just curious about how we work, again, we charge the fee for the process

[10:53] if somebody wants that entire process and not everybody does. And then we have the three main products. One, the place to store cash. Two, the place that creates income. And three, the place for the longer term net worth plays that are typical of IRAs and that kind of thing. So we have a wonderful environment where we help people in all 50 states. We do all of our work over the phone and the web. And that’s a little unusual. There are many, many people that do most of their work face to face. But the web environment sure makes it easy for us to help people everywhere. And it makes it easy for us to help anybody. We do not have minimums. And a lot of financial advisors have minimums. Your typical financial planner is going to have often a $500,000 or $1 million minimum

[11:41] because they have a business model that is about assets and our management. And they don’t want to take the time to talk to somebody that can save $200 a month or $20,000 or something like that. Whereas we’ve always felt that if somebody really wants our help, we’re going to find a way to give it to them. Even if sometimes for me, it’s just spending a half an hour on the phone with them and then saying, here, go do these things and call me back in six months. There’s really nothing I can do for you right now. So that’s a nice environment and something that we’re doing because we love to give first. But furthermore, we work with a lot of accredited investors where that minimum net worth of million dollars is a requirement for them to do their investing.

[12:20] So we’ve got a wide, wide range of client base, which is, again, a little unusual. Often a financial person will have a fairly narrow base, geographically centered or possibly even industry centered. And we just have chosen to help more people in as many of the ways that we can. And it certainly makes our practice lots of fun. So what do you think, Todd? Are there other questions that clients would have about either getting into the business or about our practice? Well, at this point, you should be looking at what your passion level is. People who are successful in this business are passionate about it. If the only reason you want to be a financial advisor is you want the paycheck, they will never happen.

[13:06] Do you agree with that? Absolutely. It’s got to be give first and it’s got to be about love. And if you can work in your area of unique ability or your areas of passion, then it’s not about work. Now I’m going to give our listeners the secret. This is the secret to being a successful prosperity economics advisor. And that’s a financial planner is talking about sacrificing over time for an event that may happen 30 years from now or that will benefit another generation through life insurance. Now, when we talk prosperity economics, we’re talking about value today, living benefits that people can use every single day. So there’s not a, well, let’s just do this for 40 years and then I’ll retire and wait and see how it goes.

[14:06] To me, that’s the most important part. What’s your opinion? Absolutely. And it’s a challenge to try to plan somebody’s finances, as I said, and to try to think in terms of 30, 40 years out. And so it’s so much easier, actually, to just take a look at what is going on today and make every dollar work as hard as it can. And you know what? The future is going to be whatever it is. We can guess all day long about tax rates and interest rates and inflation rates, et cetera, but they’re just guesses. It’s so much better to just try to build as big of a pot as you can, to keep it as flexible as you can, to keep it as much control over it as you can to keep it as liquid as necessary, which is why we like even

[14:50] our investments are no longer than 10 years and not tied up till 59 and a half unless it’s already in an IRA. And so that’s a goal of prosperity economics. Take the dollars you have today, make the most of what you’ve got rather than financial planning, which is trying to figure out what you want in the future and work backwards to today to tell you what to do. Super. Well, this is No BS Money Guy Todd Strobel for the Prosperity Podcast. Once again, we’ve got Kim Butler on the record today, actually giving away some of her secrets, which is always exciting. Thank you, Kim. Happy to do it. And the Financial Planning Has Failed eBook is still available. If you would like that, grab it at partners4prosperity.com

[15:38] slash eBook. And that’s something that will tell you even more about our practice because we get into the specifics throughout those 60 pages and there’s an audio version as well. Super. We’ll take care of 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.