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Money Monday with Brian James · Brian Thomas

0:02
Speaker 1: Eighth five on a Monday, and a happy Monday, do you,
0:05
Speaker 1: Brian Thomas. I was looking forard to this time we
0:07
Speaker 1: get some financial advice. It is time for money Monday
0:10
Speaker 1: with all were financials, Brian James. Brian James, welcome back
0:12
Speaker 1: to the program, my friend. I hope you had a
0:14
Speaker 1: wonderful weekend.
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Speaker 2: Good morning, Brian Thomas.
0:17
Speaker 3: I did.
0:17
Speaker 2: Indeed, we moved the youngest into college. Oh, we spent
0:21
Speaker 2: our first evening last night as empty nesters wandering around
0:24
Speaker 2: the house wondering what to do with ourselves.
0:26
Speaker 1: Yeah, well, I won't call it a question your summary
0:28
Speaker 1: of last night's events, given it was your first night
0:30
Speaker 1: as empty nesters wandering around the house. Wonder what that means?
0:33
Speaker 1: Is that what they're calling it these days, Brian James.
0:35
Speaker 2: Anyway, I remember there's a euphemism for bringing empty bins
0:38
Speaker 2: into the basement and then then giving up and watching TV.
0:41
Speaker 1: That's okay, Well, I'll just say you're not doing it
0:44
Speaker 1: right then.
0:44
Speaker 3: Anyway, Brian James. Give us time. We're newbies.
0:47
Speaker 2: You know.
0:47
Speaker 1: The problem is in this country we just haven't printed
0:50
Speaker 1: enough currency. All we need to do is print what
0:53
Speaker 1: forty trillion dollars in new minted currency, and we won't
0:56
Speaker 1: have a national debt problem anymore. Forty trillion dollars forty
1:00
Speaker 1: thousand billion, right, I mean this is.
1:05
Speaker 2: Lots of zeros, yes, lots.
1:07
Speaker 3: Everybody's eyes blur over, man.
1:09
Speaker 1: I remember we were talking about the national debt back
1:11
Speaker 1: in the Reagan years, in the billions and billions of dollars.
1:13
Speaker 1: Are you thinking, will We hadn't even reach one thousand
1:15
Speaker 1: trillion back then, an, how we're at forty thousand trillion
1:18
Speaker 1: and it's doubled in the last handful of years. This
1:21
Speaker 1: trajectory cannot last. Then, Clearly this is directly by all
1:25
Speaker 1: economists understanding. At least, I think most the inflation problems
1:29
Speaker 1: we're dealing with largely because we've just printed ourselves into
1:32
Speaker 1: the prosperity. That doesn't happen when you print yourselves into prosperity,
1:35
Speaker 1: or at least try and.
1:37
Speaker 2: Remember, could you remember, Brian, the last time that we
1:40
Speaker 2: talked about inflation and didn't reference printing ourselves into whatever
1:44
Speaker 2: it is? No, we always do this. Both parties get
1:47
Speaker 2: elected by promising things we can't afford, and then here
1:50
Speaker 2: we sit. So yeah, national debt top forty trillion last
1:53
Speaker 2: week Alongside that, the thirty year treasury yield hit its
1:56
Speaker 2: highest level since two thousand and seven, and so of
1:59
Speaker 2: course triggers our treasure treasure Secretary Scott pscent, he's got
2:02
Speaker 2: to do something about this, right, So his announcement was
2:05
Speaker 2: that the Treasury is going to double its scheduled buyback
2:07
Speaker 2: program for bonds that mature in the next turn ten
2:09
Speaker 2: to thirty years, and he's going to raise the repurchase
2:12
Speaker 2: himount to at least four billion dollars per operation, So
2:15
Speaker 2: that means these total buybacks would go to a minimum
2:18
Speaker 2: of twenty eight billion dollars from September basically through the
2:21
Speaker 2: months of September. And that sounds like technical boring stuff,
2:24
Speaker 2: but what he's doing, he's adjusting the Treasury's normal buyback operations,
2:28
Speaker 2: and that the result of that is to lower long
2:30
Speaker 2: term rates by modestly shifting the composition of how that
2:33
Speaker 2: outstanding debt looks towards the shorter end of the maturity spectrum,
2:38
Speaker 2: so basically shortening that the amount of time that the
2:42
Speaker 2: rest of the existing debt will come due. So that
2:45
Speaker 2: drove interest rates down. Briefly, We'll see if we get
2:47
Speaker 2: to keep this for any more than a few days.
2:50
Speaker 1: Well, I guess my question is how is this supposed
2:52
Speaker 1: to work? And then if he hadn't done what he
2:54
Speaker 1: had done, what were we looking at in terms of
2:57
Speaker 1: I guess a disaster scenario?
2:58
Speaker 2: Brian James, Well, yeah, I mean this is the I
3:02
Speaker 2: don't want to say disaster serey in the scenario. I
3:04
Speaker 2: don't want to be you know, alarmist about this, because
3:06
Speaker 2: we do do stupid things in short term over the
3:08
Speaker 2: short term, and we do tend to come back and
3:10
Speaker 2: fix them when they get too painful. And somebody in
3:13
Speaker 2: the Republican Party is going to have to remember that, Yes,
3:15
Speaker 2: midterms are really around the corners, and if we make
3:18
Speaker 2: everyone miserable the day they go to the ballot box,
3:21
Speaker 2: that's not going to end well for anyone. So that's
3:23
Speaker 2: why there was this little bit of a hail Mary,
3:25
Speaker 2: and it didn't it didn't last too long. Right, this
3:28
Speaker 2: is all last week's steff. So the next day a
3:30
Speaker 2: lot of that turned around, you know, not too surprising,
3:33
Speaker 2: thirty one and a half trillion dollars in outstanding treasuries
3:36
Speaker 2: and so shifting that extra fourteen billion dollars over the week,
3:39
Speaker 2: that's just a drop in the bucket. We've got to
3:41
Speaker 2: do more here for this to really have an impact.
3:43
Speaker 3: Wow. Well, I know this.
3:45
Speaker 1: This is swirling conversations about modern monetary theory, ie that
3:49
Speaker 1: you can print yourself in a prosperity, which has never
3:50
Speaker 1: worked anywhere it's been tried, I guess, and I know
3:53
Speaker 1: the answer from the left politicians, the Bernie Sanders and AOCS.
3:57
Speaker 1: They've come out and said it, we need tax more,
4:00
Speaker 1: we need to raise the taxes on the evil billionaire class,
4:03
Speaker 1: and even AOC says we need to tax at seventy
4:06
Speaker 1: percent rate people over making more than ten million dollars.
4:09
Speaker 1: But when you add it all together, Alicia Finley did
4:12
Speaker 1: it this morning, and many other people have done it before.
4:15
Speaker 1: I know that it was one of the KTO Institute
4:19
Speaker 1: crunched the numbers on all the programs they want to
4:21
Speaker 1: put in place. In the outrageous amount that's going to
4:24
Speaker 1: cost a retaining year somewhere between seventy and two hundred trillion.
4:27
Speaker 1: But as a Lissa pointed out, the two point three
4:31
Speaker 1: trillion over a decade, if you did that five percent
4:33
Speaker 1: annual wealth tax on billionaires, tax everything they have at
4:37
Speaker 1: five percent annually, carrying complications of its own, but that
4:40
Speaker 1: would only be two point three trillion over a decade,
4:43
Speaker 1: and that's not even as much as this year's deficit,
4:45
Speaker 1: So that's not going to stop the problem. And then
4:48
Speaker 1: the other figure that was given, if the government confiscated
4:50
Speaker 1: all of the wealth of all of America's billionaires, you
4:53
Speaker 1: would get a total of eight point four trillion. That
4:55
Speaker 1: would be a one time shot. I guess they'd have
4:57
Speaker 1: to liquidate their assets to do that. But eight point
5:00
Speaker 1: four trillion doesn't even come close to reducing the deficit.
5:03
Speaker 1: They said that basically puts us back to Spring twenty
5:06
Speaker 1: twenty three numbers, But then it ends the wealth generation
5:09
Speaker 1: cycle of all the trillionaires and billionaires that you've taxed
5:12
Speaker 1: into submission.
5:13
Speaker 3: I mean, it doesn't work.
5:14
Speaker 1: I think, Brian, what I'm trying to get to is
5:17
Speaker 1: Republicans and Democrats are both responsible for the spending problem
5:20
Speaker 1: we have.
5:22
Speaker 2: Yeah, and I'll argue one point that you made early
5:24
Speaker 2: on in that comment that no country in history has
5:28
Speaker 2: ever spent itself into prosperity. I would argue we're living
5:31
Speaker 2: in the one that has done so, it's how long
5:33
Speaker 2: it can last. We haven't that this has been for
5:35
Speaker 2: decades the way we've approached things, and we've simply gotten away.
5:38
Speaker 3: With it because of our economic might.
5:41
Speaker 2: Exactly, and that's arguably that's where it came from. But
5:44
Speaker 2: at some point we're going to have to be realized
5:46
Speaker 2: that we're kind of running on fumes. And then really
5:48
Speaker 2: this will come down to society being willing to sacrifice
5:52
Speaker 2: something along the way. This is really literally no different
5:55
Speaker 2: than when I'm sitting down with a household where the
5:57
Speaker 2: problem is obvious and staring everyone in the face. We
6:00
Speaker 2: spend more than our resources are. That means we have
6:03
Speaker 2: to sacrifice. So I would be telling this family, hey,
6:05
Speaker 2: we can't go out to dinner on the weekends anymore.
6:08
Speaker 2: You're going to have to not buy the seventy thousand
6:10
Speaker 2: dollars pickup truck. You're going to have to maybe steck
6:12
Speaker 2: stick to a used thirty forty thousand dollars one. You've
6:14
Speaker 2: got to sacrifice something somewhere, and it comes on both sides, right.
6:18
Speaker 2: It might be Republicans have to be willing to raise
6:21
Speaker 2: taxes somewhere on something, and Democrats are going to have
6:25
Speaker 2: to be willing to sacrifice some pet project programs that
6:28
Speaker 2: they've always wanted to have in place. It's just none
6:30
Speaker 2: of it is realistic anymore. That's the point that we've
6:32
Speaker 2: hit well.
6:33
Speaker 1: And I agree with you. You could sell an increase in taxation.
6:37
Speaker 1: I imagine if you had a corresponding promise to cut
6:41
Speaker 1: the size and scope of government. You know, the additional
6:44
Speaker 1: taxation always ends up going to fund existing programs or
6:47
Speaker 1: expanding on programs that they haven't even thought of yet.
6:49
Speaker 1: That's the challenge. Every time additional money goes into government,
6:52
Speaker 1: they look at it as a source of new revenue,
6:54
Speaker 1: failing to appreciate the stuff that they've already agreed to
6:57
Speaker 1: buy and pay for and service.
7:00
Speaker 2: And I would argue that the pendulum swings the other way.
7:02
Speaker 2: The one Big Beautiful Bill brought a whole bunch of
7:04
Speaker 2: tax cuts with it, but no spending cuts. Tax cuts
7:06
Speaker 2: and spending cuts are two different things. All we're doing
7:09
Speaker 2: is cutting the legs out of the revenue stream, but
7:11
Speaker 2: we're not cutting the expenses. I don't know why that
7:13
Speaker 2: was so hard for them to bring up. And the
7:15
Speaker 2: Republicans control everything, you know, so why can't we talk
7:19
Speaker 2: about the and act some of the spending that we have. Honestly, Ryan,
7:22
Speaker 2: I think it's because the public is not wanting to
7:25
Speaker 2: be told it has to sacrifice. Yeah, you're right, So
7:27
Speaker 2: let's not even talk about it because they won't ask well.
7:29
Speaker 1: And isn't that exactly where Donald Trump and other Republicans
7:33
Speaker 1: that we can grow ourselves out of our problem with spending.
7:36
Speaker 1: But the problem that I mean if you give people
7:38
Speaker 1: more money. I think this has been an economic reality
7:41
Speaker 1: that his people have shown over and over again. If
7:43
Speaker 1: you let people have more of their money, they go
7:45
Speaker 1: out and spend it, which ends up boosting the economy
7:47
Speaker 1: and overall tax revenues. But going back to the problem,
7:50
Speaker 1: unless you cut back on spending, you can't grow yourself
7:53
Speaker 1: out of the hole.
7:54
Speaker 3: You got to stop.
7:56
Speaker 2: That's yes, at some point Again, that's the sacrifice that
7:58
Speaker 2: has to be made as a society. Our leadership does
8:02
Speaker 2: not think we are mature enough to handle that conversation.
8:05
Speaker 2: In so far, that has worked. That's been the platform
8:08
Speaker 2: of every party that has won any election over the
8:10
Speaker 2: last fifty sixty seventy years. We will give you stuff,
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Speaker 2: vote for us. We'll give you free stuff, and nobody
8:15
Speaker 2: has to pay for it.
8:16
Speaker 1: So the party will end and people will ultimately get
8:19
Speaker 1: that message. Well, when another great recession, or perhaps even worse,
8:23
Speaker 1: a depression shows up well.
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Speaker 2: Sooner or later. We have to realize that the United
8:30
Speaker 2: States government, federal government, is the largest customer of anybody
8:33
Speaker 2: on the face of the earth. And if we can't
8:35
Speaker 2: borrow anymore, then everyone has lost their largest customer, their
8:39
Speaker 2: largest spender. And not that they can't be absorbed by
8:42
Speaker 2: the private sector, but it's not going to happen without
8:44
Speaker 2: leaving a mark at the end of the day. Again,
8:46
Speaker 2: I don't want to sow panic out there over this
8:47
Speaker 2: kind of stuff. Money will still move in a circle.
8:50
Speaker 2: You got to go to work and pay your bills.
8:51
Speaker 2: I got to go to work and pay my bills.
8:52
Speaker 2: Everybody I'm stuck in traffic with has the same problem.
8:55
Speaker 2: The money will continue to move in a circle. It
8:57
Speaker 2: just could be pretty bumpy here in the short run.
9:00
Speaker 2: I've seen that before though, right, We've seen two thousand
9:02
Speaker 2: and eight, we've seen twenty two. Every now and then
9:04
Speaker 2: there's a panic. As long as you are have arranged
9:06
Speaker 2: your finances in a process where your dollars that are
9:09
Speaker 2: due today to pay your bills are not exposed to it,
9:12
Speaker 2: then in the long run you're going to be okay.
9:14
Speaker 2: In the short run, buckle up and put your trade
9:16
Speaker 2: table in the upright positions.
9:17
Speaker 1: Well, and the almost comical if it weren't so well
9:20
Speaker 1: representative of an existential threat. If there is another two
9:24
Speaker 1: thousand and eight, or there is another recession of any
9:26
Speaker 1: any sort, what's the response from our lords and masters
9:29
Speaker 1: and government Brian James, like COVID, what do we need
9:31
Speaker 1: to do? Oh my god, it's a crisis. The economy
9:33
Speaker 1: is going down. We need to print more dollars.
9:36
Speaker 2: Yeah, exactly, And that's a golf club we will not
9:40
Speaker 2: have in the bag anymore if other countries get to
9:42
Speaker 2: Remember if we're printing dollars, well, what that really means
9:44
Speaker 2: is we're wanting other countries to buy our debt. That's
9:46
Speaker 2: what that means. We're borrowing money from other countries, and
9:50
Speaker 2: we could get to a point. I don't see this
9:52
Speaker 2: happening soon though, because the United States is still by
9:54
Speaker 2: far the largest economic entity on the face of the earth.
9:57
Speaker 2: But there are more and more discussions happening between and
10:00
Speaker 2: among countries about maybe we need to have a little
10:03
Speaker 2: less exposure to US debt. That is happening more so
10:05
Speaker 2: than in the past. Well, and a fan thing will
10:07
Speaker 2: bring the head to the overspending conversation. Maybe it's just that, Brian.
10:10
Speaker 2: Perhaps it's a good thing we're all worried and talking
10:12
Speaker 2: about this. Now, that's exactly right. If I don't have
10:16
Speaker 2: somebody to lend, I can't borrow.
10:17
Speaker 3: Brian James Money Monday.
10:19
Speaker 1: We're going to talk to him about what is an
10:20
Speaker 1: index universal life insurance policy and should you get one?
10:24
Speaker 3: More with Brian James Don't Go Away fifty five KARC
10:27
Speaker 3: The Talk Station.
10:30
Speaker 1: Eight nineteen fifty five KRCD Talk Station Brian Thomas with
10:34
Speaker 1: Brian James doing the Money Monday segment. He's with all
10:38
Speaker 1: of financial he's the course of financial plann which is
10:40
Speaker 1: a good idea to get one so they can keep
10:42
Speaker 1: you out of trouble and keep your investments going right.
10:44
Speaker 1: And oh, a fiduciary obligation to you. That's critical when
10:46
Speaker 1: you're getting a financial planner and someone who can tell
10:48
Speaker 1: you whether or not buying an index universal life insurance
10:51
Speaker 1: policy is a good idea. First off, Brian James, what
10:54
Speaker 1: is an index universal life insurance policy?
10:58
Speaker 2: Yeah, let's start there. So universal life policy, it's permanent
11:02
Speaker 2: life insurance. So that's of course different than term term
11:05
Speaker 2: is twenty years thirty years. And then here's a misnomer
11:08
Speaker 2: about term. Term insurance doesn't mean the policy goes away.
11:10
Speaker 2: It means the premium goes away. You could still be
11:12
Speaker 2: insured for that fifteen hundred dollars a year or whatever
11:15
Speaker 2: you're paying for your cheap term insurance you got when
11:17
Speaker 2: the kids were babies, but after the twenty or thirty
11:20
Speaker 2: year term is up, the premium might now be four
11:22
Speaker 2: five thousand dollars. But that's not what we're talking about today.
11:25
Speaker 2: We're talking about permanent life, specifically iul's Index Universal Life.
11:30
Speaker 2: So the way that works, that's designed to stay enforce
11:32
Speaker 2: your whole life as long as it's got enough money
11:34
Speaker 2: in it. Part of every premium that you invest in
11:37
Speaker 2: that you put into it buys life insurance. The rest
11:40
Speaker 2: the overage is what's called the policy's cash value. That
11:44
Speaker 2: cash value earns interest that is tied to a market index.
11:47
Speaker 2: Most often that's the S and P five hundred, right,
11:50
Speaker 2: the five hundred largest companies in the United States. Now,
11:52
Speaker 2: notice what I said, though it's not invested in the
11:54
Speaker 2: S and P five hundred, you don't own stocks inside
11:57
Speaker 2: insurance policy. Instead. Durrance Company credits interest based on a big,
12:02
Speaker 2: huge algorithm tied to the market. So if the market falls,
12:06
Speaker 2: those policies had what's called a floor, meaning your credited
12:09
Speaker 2: return can't go below zero. So, yes, it is a
12:11
Speaker 2: true statement to say that these can be structured in
12:14
Speaker 2: a way where there's some principal protection. However, there's a
12:16
Speaker 2: trade off. If the market rises twenty five percent, as
12:20
Speaker 2: we've had many of the last three years here, you
12:23
Speaker 2: won't get that. There's going to be a cap. It
12:24
Speaker 2: might be ten percent, it could be twelve percent something
12:27
Speaker 2: like that. There could be a participant patient rate, meaning
12:30
Speaker 2: you only get x percent of the market market does
12:32
Speaker 2: on the way up. So it's a little bit different
12:34
Speaker 2: than a standard investment.
12:35
Speaker 1: Okay, and I get that you get some peace of
12:38
Speaker 1: mind knowing you're always going to get something as a return,
12:41
Speaker 1: but you might miss out on some of those huge years.
12:43
Speaker 1: That's sort of sum that up, all right, Yeah.
12:46
Speaker 2: That's exactly, And again I'm not pitching these as negative.
12:50
Speaker 2: They're a tool like anything else. Sure, a hammer, I
12:52
Speaker 2: can build a birdhouse or hit myself in the head
12:54
Speaker 2: with it. It depends on what I do with that tool.
12:56
Speaker 3: Right.
12:57
Speaker 2: Well, so first off, you need death benefit. That's important.
12:59
Speaker 1: Gohe I'm sorry, no, no, I was just you can go
13:01
Speaker 1: ahead and finished. I just want to ask you to
13:03
Speaker 1: draw a distinction between this and the whole life insurance.
13:06
Speaker 2: Sure, whole life is kind of that's the old school
13:09
Speaker 2: insurance that basically has invested in extremely conservative types of things.
13:13
Speaker 2: Used to be when interest rates were Remember we don't
13:16
Speaker 2: like high interest rates. We've got two generations now that
13:18
Speaker 2: are addicted to low rates. Interest rates used to be
13:20
Speaker 2: significantly higher in the forties, fifties, and sixties. You could
13:23
Speaker 2: buy permanent a whole life policy that was again a
13:27
Speaker 2: permanent policy, and it might get you six seven eight
13:30
Speaker 2: percent return guaranteed. That's pretty darn good. It's been forever
13:33
Speaker 2: since we've seen interest rates, except for a very very
13:36
Speaker 2: brief interlude with them a few years ago during COVID.
13:40
Speaker 2: We just haven't seen sustained interest rates like that. Nor
13:43
Speaker 2: do we want that, right, we don't necessarily want that.
13:45
Speaker 2: But a whole life is very limited. Universal means you
13:48
Speaker 2: have investment choices inside the policy variable or index. Universal
13:52
Speaker 2: means those investment choices include the stock market. All right.
13:57
Speaker 1: So since the headline and the subject matter is who
14:00
Speaker 1: should and who shouldn't buy a universal life insurance policy?
14:04
Speaker 1: Who are these good foreign who might want to steer
14:07
Speaker 1: clear of them?
14:07
Speaker 2: Brian, here are the concerns. Oftentimes these things are pissed
14:11
Speaker 2: pitched as one size fits all. This is everything. It's
14:14
Speaker 2: the Swiss Army knife of finances. Right. You get death benefit,
14:17
Speaker 2: you get protected or a tax sheltered investment growth, you
14:21
Speaker 2: get the growth of the stock market and all those
14:23
Speaker 2: kinds of things. And all of that is technically true.
14:26
Speaker 2: But I'll tell you that when having been on the
14:27
Speaker 2: other end of these after people have had them for
14:29
Speaker 2: twenty or thirty years and maybe they don't need the
14:31
Speaker 2: death benefit anymore because the kids are up and out,
14:34
Speaker 2: the mortgage has paid off all that stuff. They just
14:36
Speaker 2: don't need that death benefit. And they look at the
14:38
Speaker 2: pile of money and they'll say, hey, that did pretty well.
14:40
Speaker 2: And where I kind of have to burst the bubble
14:42
Speaker 2: is to say, yeah, it did fine you in this
14:44
Speaker 2: index universal life. But here's the years the market did
14:47
Speaker 2: twenty five percent and you got twelve or fourteen or whatever.
14:49
Speaker 2: So you gave up your snowball effect. And here's another thing,
14:53
Speaker 2: even the growth that has happened within it remember to
14:56
Speaker 2: access that if you want to access it during life,
14:58
Speaker 2: you are paying income to taxes on those gains. You
15:01
Speaker 2: can borrow against the policy. If this is a massive
15:03
Speaker 2: overstuffed with cash policy, then yes you can technically borrow
15:07
Speaker 2: against it. But if you're somebody who's got fifty sixty
15:09
Speaker 2: seventy thousand dollars, that's not going to sustain you for
15:11
Speaker 2: the rest of your life. So in that case, you're
15:13
Speaker 2: simply taking withdrawals. And what you did was you converted
15:16
Speaker 2: something that grew and should be taxes a capital gain.
15:19
Speaker 2: You've chosen to have a taxes ordinary income, which is
15:22
Speaker 2: always going to be a little weaker than the capital
15:23
Speaker 2: gain side of things.
15:24
Speaker 1: All right, since you mentioned a floor, you know the
15:27
Speaker 1: loss isn't quite often market sustains massive losses COVID nineteen
15:30
Speaker 1: what people lost a quarter of their investment or a
15:32
Speaker 1: half or whatever. This has been bad years like that.
15:35
Speaker 1: The upside with this universal life is at least you
15:37
Speaker 1: wouldn't lose a third of your investment.
15:42
Speaker 2: That is true, and that's why I think they can
15:44
Speaker 2: serve a decent role as long as if there's a
15:46
Speaker 2: there's a need for death benefit, start there. If you
15:49
Speaker 2: need insurance to put it on the table as an option.
15:51
Speaker 2: But in the case you just describe, you're talking about
15:53
Speaker 2: somebody who's got other diversified portfolios that do not have
15:57
Speaker 2: the constraints that money inside of an insurance he does.
16:00
Speaker 2: And let's say here, here's an example. Let's say you've
16:02
Speaker 2: got a family with children with special needs and those
16:05
Speaker 2: needs aren't going to go away when they turn eighteen
16:07
Speaker 2: or twenty one. They're always going to need support. That's
16:09
Speaker 2: a person who probably needs permanent, ongoing life insurance even
16:13
Speaker 2: if they have significant assets, because there's another human being
16:16
Speaker 2: out there that's going to live forty fifty sixty years
16:18
Speaker 2: longer than the owner. So that's a case where we
16:21
Speaker 2: need death benefit. But the investment growth can help create
16:24
Speaker 2: that death meth.
16:25
Speaker 1: Makes sense to me, Brian James, looking at the big picture.
16:27
Speaker 1: It's good for some, maybe not as good for others,
16:29
Speaker 1: but it's an option that may be considered. And of
16:31
Speaker 1: course you've got a guy like Brian James in your corner,
16:34
Speaker 1: it might be an option you will discuss. There's one
16:36
Speaker 1: another benefit right there, Brian James. I understand more people
16:39
Speaker 1: are using AI for financial advice, is Brian James using
16:42
Speaker 1: AI in terms of his management of people's portfolios. What's
16:45
Speaker 1: the story we'll find out next with Money Monday's Brian
16:48
Speaker 1: James fifty five KRC.
16:51
Speaker 3: Percive Deep Talk Station.
16:53
Speaker 1: Hey twenty eight if if you have KERCD talk station,
16:55
Speaker 1: Happy Monday, Money Money with Brian James. One more segment
16:58
Speaker 1: with Brian before we get to our economist guess next
17:01
Speaker 1: Todd Sheets, Yes, we have no free burritos his op ed.
17:05
Speaker 1: He'll break that down coming up, kind of continuing the
17:07
Speaker 1: theme this morning, springing from the forty trillion dollar debt.
17:09
Speaker 1: Brian James. It's nuanced, that's what it is. AI using
17:14
Speaker 1: AI for investment of ice. That's when nerd Wallet concluded. Anyway,
17:18
Speaker 1: what's the story AI? It sounds like something people would
17:20
Speaker 1: logically turn to. More and more people turning to AI
17:23
Speaker 1: for like a multitude of questions, including getting therapy and
17:26
Speaker 1: things like that. I'm a little jaded, in cynical and
17:29
Speaker 1: skeptical the whole concept, Brian James. But where do you
17:31
Speaker 1: come down on this in so far as brokering personal
17:34
Speaker 1: financial advice?
17:36
Speaker 2: I think it can be a power. I think it
17:38
Speaker 2: is a powerful tool, and the way I think about
17:40
Speaker 2: it is Google on steroids. So if I ask Google
17:43
Speaker 2: a question, it's going to give me thirty forty fifty
17:45
Speaker 2: articles to go read myself. If I ask that same
17:48
Speaker 2: question of chat GPT, it's going to go read those
17:51
Speaker 2: articles and draw some conclusions for me basically summarizing all
17:55
Speaker 2: those And the fact that it does it and you know,
17:56
Speaker 2: thirty to sixty seconds is pretty amazing. That's where I
17:59
Speaker 2: think it's power, and that's where I think it's most
18:01
Speaker 2: it's being mostly used. But we're talking about this this
18:03
Speaker 2: morning because of a survey that nerd Wallet conducted and
18:07
Speaker 2: they concluded that more than one in four Americans have
18:10
Speaker 2: now used chat GPT or something like it to ask
18:12
Speaker 2: a personal financial question. That doesn't mean what's gonna they're
18:15
Speaker 2: asking necessarily what's going to make me a bazillion dollars
18:17
Speaker 2: this afternoon? Although I'm sure that question guarantees twenty out there.
18:20
Speaker 2: I suspect chatch ept is going to answer that pretty uh,
18:24
Speaker 2: pretty much like I would from a fiduciary standpoint, that
18:27
Speaker 2: they're make no such thing anyway, you know, but it's
18:29
Speaker 2: already here. It's not whether people should use it, it's
18:31
Speaker 2: how they're using it. So the survey of two thousand people.
18:34
Speaker 2: The results were somewhat encouraging, others a little scary. The
18:38
Speaker 2: number one people cited that the reason that people said
18:40
Speaker 2: they use it is speed. They just want a quick
18:42
Speaker 2: answer to something. What's the roth IRA contribution limit this year,
18:45
Speaker 2: or how do how does the backdoor roth conversion work?
18:47
Speaker 2: Those kinds of things. Another twenty eight percent said they
18:51
Speaker 2: liked getting advice without feeling judged. I'm not sure where
18:54
Speaker 2: that comes from, although there might be a corner of
18:56
Speaker 2: my industry that isn't exactly working with people that could be.
19:00
Speaker 2: But you know, again this beat and not digging through
19:02
Speaker 2: ten websites for the same answer, that kind of thing.
19:05
Speaker 1: Well, I guess I'm concerned about the the real phenomenon
19:09
Speaker 1: that is, you know, we've all come to know garbage in,
19:11
Speaker 1: garbage out. There's all kinds of reports about how AI
19:15
Speaker 1: reaches its conclusions. It goes out into the vast quantity
19:18
Speaker 1: of unlimited information in the world and you know, parses
19:21
Speaker 1: through it and then comes up with some sort of
19:23
Speaker 1: consolidated answer. But if you feed AI enough lies and
19:28
Speaker 1: repeat it over and over again. There was a Reddit
19:31
Speaker 1: subgroup that did this and they had some it was
19:34
Speaker 1: really strange, like Donald Trump was dead, and that it
19:37
Speaker 1: was I joked last week it was something like a
19:39
Speaker 1: rabid cockroach killed him. It was some bizarre story that
19:42
Speaker 1: no one would ever believe, but they read it. Subgroup
19:44
Speaker 1: went and repeated it over and over again. They went
19:47
Speaker 1: out into the world to other websites and Twitter accounts
19:50
Speaker 1: and TikTok accounts and said the same thing and ultimately
19:53
Speaker 1: build up sufficient volume of data saying that this had
19:56
Speaker 1: actually happened that well. AI actually adopted it as an
19:59
Speaker 1: answer to question what happened to Donald Trump?
20:01
Speaker 3: How did he die? And would give you an answer?
20:03
Speaker 1: I mean, I'm sure the same thing could go on
20:05
Speaker 1: in so far as financial information is concerned out there.
20:07
Speaker 1: So how do you know if the information you're reading
20:09
Speaker 1: is actually worth relying on?
20:12
Speaker 2: Well, I think it's it's the same old ad as
20:14
Speaker 2: you you're not. You can't ask any tool, or frankly,
20:16
Speaker 2: any human being live my life for me, make all
20:20
Speaker 2: my decisions for me, and make it easy. You cannot
20:22
Speaker 2: do that. You can't trust anyone has got or tool
20:24
Speaker 2: has got your best interest in their minds. So what
20:28
Speaker 2: I would say is that same old adage trust, But verify,
20:31
Speaker 2: let it give you information, ask it more questions, challenge it.
20:34
Speaker 2: I always do that just to make sure. And I've
20:36
Speaker 2: literally used the word they talk to it like a
20:37
Speaker 2: human being, right, it's not a Google search. If you
20:39
Speaker 2: talk to it like a human being, it will respond
20:41
Speaker 2: like a human being, and you can challenge it to
20:43
Speaker 2: go double check. Are you sure about that? I literally
20:46
Speaker 2: have typed that in and it has come back with
20:48
Speaker 2: better information, So, oh good. Maybe I think the good
20:51
Speaker 2: thing is you can come to the table with less
20:53
Speaker 2: information than you've had to have in the past, but
20:55
Speaker 2: you still can't come to the table with no information.
20:58
Speaker 2: It's just like any other advisor or tool or anything else.
21:01
Speaker 1: Well, I suppose another question worth asking why you're doing
21:04
Speaker 1: this exercise is to tell chat GPT or whatever AI
21:08
Speaker 1: program you're using, to provide you the source material for
21:11
Speaker 1: its conclusions.
21:13
Speaker 2: It does, and a lot of people ignore that matter
21:14
Speaker 2: of fact, that chat GPT anyway does that by default,
21:17
Speaker 2: because when I ask a question, for example, I can
21:20
Speaker 2: never remember what this year's WROTH contribution limits are, so
21:23
Speaker 2: I always go to chat GPT and it tells me
21:25
Speaker 2: what it is, and then right underneath it, there's a
21:27
Speaker 2: little link to the article, and it's usually straight from
21:30
Speaker 2: the IRS that lays out the table of these things.
21:32
Speaker 2: So I use it for a little factual information like
21:34
Speaker 2: that frequently. Here's another example. I have a client who
21:37
Speaker 2: worked for P and G and moved here from Canada
21:40
Speaker 2: asking me questions about how the Canadian retirement plan works
21:43
Speaker 2: with the American one. That's something where I'm going to
21:45
Speaker 2: need a little bit of help to put together, and
21:47
Speaker 2: I definitely use chat GPT to find me the resources.
21:50
Speaker 2: I'm not going to follow the bullets it gives me,
21:52
Speaker 2: but I absolutely will follow the articles it gives me.
21:55
Speaker 1: And that's the direction I would go, because I wouldn't
21:58
Speaker 1: trust anything coming out of it without looking at the
22:00
Speaker 1: source material, because the source material, you know, from my
22:02
Speaker 1: personal experience, may be well questionable.
22:05
Speaker 3: You know, there are I know.
22:07
Speaker 1: Political bias when I read to Brian James and I
22:09
Speaker 1: go to a lot of different politically bias sides from
22:11
Speaker 1: both sides of the political ledger. But it's so seeming,
22:13
Speaker 1: it's so apparent to me that I always know that
22:15
Speaker 1: you know what raised eyebrow of skepticism with regard to
22:18
Speaker 1: anything I read, because quite often you'll find the truth
22:21
Speaker 1: lies somewhere in the middle. But reading the source material
22:23
Speaker 1: I think could be provide valuable information. And it's your point.
22:26
Speaker 1: If you want to know what the max on the
22:28
Speaker 1: roth Ira contribution is the only place you can really
22:30
Speaker 1: find the truth on it is the government website, which
22:32
Speaker 1: establishes what the max is right exactly from the horse's mouth.
22:36
Speaker 1: And I've literally said, you give me official government sources,
22:39
Speaker 1: right you will limit to the irs. Doesn't summarize anything,
22:42
Speaker 1: so it has to do a little extra work, but
22:45
Speaker 1: it does work.
22:46
Speaker 2: It's pretty powerful for tools like that. But again, hold
22:48
Speaker 2: my hand, live my life for me. That is not
22:50
Speaker 2: what it's for.
22:51
Speaker 1: But at least in so far, if you want a
22:53
Speaker 1: quick question answered, it's an okay starting point, but just
22:57
Speaker 1: don't let that be the end all be all.
22:58
Speaker 3: Maybe is that.
22:59
Speaker 2: It it's a fabulous starting point. I mean it's a
23:02
Speaker 2: huge time saver to go go find me. You know,
23:04
Speaker 2: like I said, Google will find fifty articles, all of
23:07
Speaker 2: which probably say the same thing, buried inside of paragraphs
23:09
Speaker 2: and ads. Chat GPT will read it, pull out that
23:12
Speaker 2: information without shoving ads in your face.
23:14
Speaker 1: Brian James, Brian James, Smaller Financial, I appreciate your business
23:17
Speaker 1: loaning you out for these segments every Monday. We'll do
23:20
Speaker 1: it again next Monday and have a wonderful week between
23:23
Speaker 1: now and then, my friend.
23:25
Speaker 2: All right, you too. I will report back on my
23:26
Speaker 2: first week as an empty master. We'll see how that goes. Well.
23:29
Speaker 1: Learn to love it, man, there's a lot of pluses
23:31
Speaker 1: to that, a lot, trust me, been there.