Protect Yourself from Bad Financial Advice

As of June 2021, it was refreshing to see that action was being taken against an agent/financial planner who claimed to be helping clients practice the Infinite Banking Concept (IBC) by accruing retirement savings in variable annuities and variable life insurance policies.  Among many other things, this agent/planner was selling insurance products by recommending clients to borrow against one whole life insurance policy to finance the premiums for another life insurance policy.

Furthermore, many of this agent/planner’s clients had been advised to liquidate their IRAs and 401(k)s, as well as other savings vehicles, to purchase variable annuities, thus exposing themselves to the market risks normally borne in full by the insurance companies who willingly assume such risks when fixed guaranteed annuities are purchased.

In addition to this, blank forms were recurrently used by the agent/planner, to collect client signatures authorizing variable annuity purchases.  This violated the client’s right to full disclosure and the associated risks, costs and fees associated with variable annuities, prior to purchasing these highly volatile products.

All-in-all it is good to know, “Another one bites the dust”, who was using the IBC mantel to fraudulently take advantage of others.  But let’s examine some key points which come up in this legal case which should have been flashing amber lights to anyone who was checking this agent/planner out in the first place.

1. The cost of life insurance should always be based on your current income and net worth. You should never have to borrow money from a third party, against another policy, or sell your assets to purchase life insurance. That said, selling certain assets and liquidating certain savings accounts can be a solid financial plan to move funds from non-guaranteed taxable accounts to guaranteed non-taxable contracts like whole life insurance or annuities.
2. Variable annuities are contracts which place the risk of future growth on the client instead of this risk being carried by the insurance company. This makes variable annuities an uncertain way to plan for retirement income.  Insurance should be reserved to help you avoid risk not assume risk.
3. IBC is about using cash value life insurance to reduce or recover the cost of interest in your life. Leveraging cash values in life insurance to purchase other policies, to fund investments or variable annuities carries an unknown risk which a good IBC agent should be quick to point out in advance.  Assuming risk is a financial planning or investment technique, not an IBC strategy.
4. Anyone who signs a blank form is not using common sense. IBC is based on common sense and common sense tells you to read and understand documents before signing them.
5. Leverage is a good thing as long as you control it. If it controls you, then you will lose interest and possibly even your principal. This is why using leverage to purchase anything, including life insurance and annuities, must be controlled by logic. Yet too frequently, greed tempts people to entertain ideas and actions where angels would fear to tread.  Taking time to understand the logic behind using other people’s money to build wealth while keeping your own money secure and growing in a guaranteed contract like whole life insurance is important.  Education of this sort can keep you from becoming the victim of schemers.

This case is one of many fraudulent cases where the name “IBC” was used as a cover to take advantage of uninformed or greedy people. Fortunately, this schemer was caught and held accountable.  But there is no rule, law or government official who can protect you against all the schemers, frauds and imposters out there.  You must become educated.

At McFie Insurance, we have practiced the concept of IBC for over 14 years.  We also understand the limitations of IBC and furthermore, realize that many advisors and agents proclaiming to teach and use IBC are not really doing anything other than attempting to sell more to earn more.

Schedule Strategy Session »

Participating whole life insurance contracts as R. Nelson Nash, the founder of IBC, stated, are contracts that are guaranteed to perform better every year, no matter what.  Yet, knowing how schemers, frauds and imposters have highjacked IBC we trademarked our own brand the Life Benefits Formula to keep others from high jacking, perverting and scamming others.

In addition to our trademarked brand, we also encourage education by publishing webinars, weekly podcasts, weekly blogs, YouTube videos as well as live workshops which logically build upon your knowledge of finances, including IBC, so you don’t become the next victim of financial fraud or misrepresentation.  Our next live workshop will be September 17-18, 2021, right here is Las Vegas, Nevada.  Call our office to reserve your place because space is limited. 702-660-7000

Dr. Tomas P. McFie

Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of McFie Insurance which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.