025 An Equal Opportunity Delusion

(Complete Show Notes Below)



In this 25th episode of the Financial Procast:

We've Got a Problem with the 401k

I'm sure that all of our readers/listeners will get a huge shock from hearing/reading this statement.  In previous episodes, we've sort of tip-toed around our dislike of the 401k.  Today we just come out and tell you exactly what we think is wrong with the 401k and why it should never be used as a primary retirement funding vehicle.

We also discuss the “auto enrollment” feature that has been prevalent on almost all 401k plans since 2006.  The intention behind forcing people to save for retirement is probably not a bad idea, if you look at in a vacuum; however, we think it's a slippery slope in terms of government intervention.  Naturally the investment industry is pleased by the automatic enrollment because they get more people contributing more money on a regular basis which  generates higher asset management fees for them.

Finally we discuss the issues with the lack of guidance most employees get with their 401k and how stagnate wages are leading to a gross under-funding of the 401k for most people.


Americans Need a Plan…And it's Not Just Poor People Doing a Bad Job

There was an article published a couple weeks ago on CNBC discussing the huge disconnect that most retirees have with the reality of their retirement vs. what they're planning to do.  What's interesting is that the survey quoted in the article was supposedly one of 1000 affluent retirees, those who make over $100,000/yr.

They had an average of $696,000 of investable assets which included their 401k balances.  The report said that they all thought they should have closer to a million bucks before retiring but 38% of the respondents had no idea how much income they were gonna need in retirement.

Can you see the disconnect here?  It seems a great number of people who make a better than average income really have no idea how much they're gonna need, how they're gonna bridge the gap, and what they should be doing to solve both problems?  That's we coined it the “equal opportunity delusion”.


Life Insurance Might Be the Financial Parachute You Need

Again, for those of you who've been with us for a while, it should come as no surprise to you that we really life cash value life insurance.  And we really like them all depending on the circumstance—including universal life insurance, participating whole life insurance, and indexed universal life insurance. So many times we get asked which product we like best…

And we don't really have an answer for that.

It really depends on what you're trying to accomplish.  All of the products we evaluate have merit in different circumstances and that's why we never try to guess, we run the numbers, and plug them into our proprietary analysis that allows us to give you an opinion based in face rather than corporate marketing platitudes.  We compare the rather short list of viable products and companies to give the best recommendation to our clients.

Also, we talk about how arrived at our belief that cash value life insurance is awesome.  If you ever thought we were just ignorant and hacks for the life insurance industry, we fill you in on what we really think.

Oh yeah…I almost forgot.  Morningstar proves once again they have no understanding of life insurance at all.

We Attack a Whole Life Insurance Hack for Spreading Stupidity

Many people have asked us why we come out against Pamela Yellen but never mention Nelson Nash, the guy who wrote “Becoming Your Own Banker”  Well, we change all that today when we break down an article that was published in one of his newsletters last year.

The article is titled, “The Top 10 Reasons NOT to BUY Equity Indexed Universal Life” and was written by Todd Langford.

Brandon and I briefly discuss each of the 10 points in Mr. Langford's hack piece and tell you why you just can't believe things like this.  If someone makes sweeping statements but doesn't seem to understand anything they're saying, you gotta look with a more critical eye.  We do that for you so that you can better understand that the issue with cash value life insurance is not so much the product itself but the use and design of the product that matter most.


Contact us if you have any questions regarding this episode or if you have any questions at all.  We're always glad to help.


5 Responses to “025 An Equal Opportunity Delusion”

  1. Steve Eads says:

    Does anyone proof-read your posts? No offense, but “all” seem to have basic errors and doesn’t help your image. Just being constructive…I promise!!! Like your stuff.

    • Brantley Whitley says:

      Thanks for your feedback Steve. No offense taken, glad you like our stuff.

    • Brandon Roberts says:

      All of them? Oh come on now, I reckon it’s no more than 95% of them. 😉

      When you run both a national insurance agency specializing in some pretty complicated insurance product design along with a Blog that has a fairly aggressive production schedule, mistakes are going to happen–’tis the nature of the beast. But we certainly appreciate anyone who wishes to take a moment to point out the ones they find.

      As far as my image goes, that went out the window when we started recording hour long conversations once a week and making them accessible to the public.

  2. Jeff Hexter says:

    I really enjoyed the podcast, and no less because I got to hear a shout-out to me.

    I have a comment about length: Go as long as you feel is necessary! As far as I’m concerned, the length of the podcast does not matter since I pause and restart them (I listen to A LOT of audiobooks and podcasts while driving) as needed. As long as the info is useful, keep putting it in!

    I also enjoy it when you get technical about how these insurance policies work and about what certain economists or economic theories say about things. Then you lighten things with an joke, or a Suze Orman snipe. I actually laugh our loud.

    • Brantley Whitley says:

      Thanks for kind words Jeff! The shout out to you was earned through that glorious iTunes review you gave “The Financial Procast”…awesome!

      And you know your comment about episode length is a good one, never really thought about it that way. When you look at the gurus of podcasting i.e. Leo Laporte, Adam Carolla, etc. they all have irregular show lengths and I never pay attention to it at all. Why? Because they’re really good at what they do.

      Maybe when our shows are as good as theirs we can push the envelope on our time.

      Seriously, one major limitation is file size. We record these as WAV files because that is the best format for recording an uncompressed audio file that can then be edited and compressed post production to an MP3. But those hour long episodes are over 600MB in a wav format, which makes for some interesting download times on my 1.5mps connection as you can imagine. Sometimes I download the file and leave my office for a couple of hours until it finishes.

      We’re gonna get a lot more technical in future episodes actually. Stay tuned!

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