Latest / Wealth On Main Street / 290: Infinite Banking Risks & How to Avoid Them

Transcript

290: Infinite Banking Risks & How to Avoid Them · Wealth On Main Street

• 0:00
  Speaker A: Foreign welcome to wealth on Main street, where conversations about growing your wealth are fun and entertaining. Wealth isn't just about money. It's the skills and the knowledge that we develop to pass on to future generations. Tune in each week to grow your mindset and your net worth at the same time.
• 0:36
  Speaker B: Let's be real. Every time you hear the words infinite banking, somebody is either calling it the greatest financial strategy ever invented or the biggest risk you could possibly take. And so which is it? What are the real risks, the ones that most people just don't talk about? And more importantly, how do you overcome them so that the infinite banking concept becomes a long term advantage, not a financial headache? And so in this video, Rich and I, we're going to strip away the hype, we're going to cut through the myths. We're going to show you exactly what you need to watch out for if you really want to succeed in implementing the infinite banking concept, which is a process, not a product. And here's the truth. If you do it right, it's one of the most powerful processes that you can use to control how you finance the things that you need throughout the course of your lifetime to recapture the interest that you would otherwise pay to someone else's bank or to some other finance company. But done wrong, it's definitely a recipe for disappointment. And so, Rich, let's get into it.
• 1:42
  Speaker A: You know, one of the risks that I think is, you know, so you have these little blenders that you, every time you get a protein shake and you get the little blender, I think it's called a magic bullet. Maybe some people have seen that before. Makes a lot of noise, but it's nice and compact, does a good job and well, they call it the magic bullet because it's this nice little compact machine that you can do a lot with, but only a certain amount of volume. Well, people are always searching and hunting and you know, keyword typing and YouTube searching and googling and chatgpting all the things that's going to be the magic bullet for their financial life. This is not that, you know, so one of the risks is making assumptions or trying to constantly seek the perfect thing that's going to solve all your problems magically. If you have financial problems, probabilities, you might have created them to some degree or you're, you're, you know, we all have these issues that we have to deal with. Trying to find the one stop solution to all that is just not reasonable and it's not realistic. So, you know, I think that's A risk is that people are looking for, you know, the, the holy grail of financial solutions to everything in their life and they want to continually abdicate that responsibility to now this thing that's going to solve all their problems for them without saying, oh, I actually need to step up and be a part of the solution myself.
• 3:02
  Speaker B: Yeah, that's a really good point. And I would add to that, you know, if most people that we speak to who share with us, they may say something like, I really, I already understand the infinite banking concept. And then when we look at that, maybe explore that a little bit more to say, okay, well let's expand on that together and let's see if we've got the same understanding of what the infinite banking concept is. And we hear some really interesting things like I want to implement this because I want to get rich. People buying every future car that I'm going to own and I want to get rich. You know, insert whatever it is here and instantly we know that we've got some work to do to get someone to clarity. Because before we talk about the real risks, which all boils down to the policy owner's behavior, if you just put premium into a dividend paying whole life insurance contract, if that's all you did was pay the premium and you were consistent at doing that, the insurance company is going to administer that contract all on their own. They don't need any intervention from you, they don't need any guidance from you, they don't need anything other than capital outlay called premium. That has nothing to do with the infinite banking concept at all. That is funding the purchase of a product, ideally from a reputable life insurance company. Now if you now get into the risk, well, the risk is that if you begin borrowing against cash value, which is not money for any of our advisor colleagues in the industry, please develop that understanding and stop saying that it's money. It's not. It's a ledger entry. That's it. The net present value of the future payment of a death benefit. It is not money.
• 4:55
  Speaker A: And you're never taking that out. And so for any from the general public or advisors, you're not putting premium in and then taking your quote unquote money out because it's not money and you're not taking it out. You're borrowing against an asset. So the language is really important there. And some of the risks are not understanding the right language.
• 5:17
  Speaker B: Precisely. So if you, because words have meaning, right? And so if the policy owner says, okay, I'm going to, I understand that I'm going to be borrowing against cash value, which is again is not money and I can repay the loan on my schedule. It's an unstructured loan that can represent a significant risk. On one hand it's an advantage. But having total and absolute control without discipline and without a real understanding of what it takes to run this like a business, that represents a significant risk. And Nelson expressed in his book, he said, look, if you find yourself in a situation where you've done that and you haven't repaid your loans, don't you go pointing the dirty end of the stick at anybody else. You're accountable for that. So the risk is the human behavior. And how did Nelson, what did Nelson say is more important?
• 6:17
  Speaker A: The behavior of the policy owners? By far more important. And we've, I mean we've, we've got multiple videos and content pieces where we've proven that time and time again. And Nelson proves that in his book. In fact, we did a massive deep dive in Nelson's book and we went through as an example with twin sisters, we went through the equipment financing section and we, we summarized and iterated the importance of human behavior because in the equipment financing example, maybe we can link to that somehow below. But the equipment financing example, he gives us a baseline of when the insurance company is doing all the work. And then he gives us an example of when the insurance company did the same amount of work but the policy owner now started to intersect with the policy and do his own thing. And through that behavior, as long as there's proper guidance and instruction and the end result is that they're applying more money into premium, you know, so quote unquote, paying themselves extra interest, which is, which is just a matter of cash flows, financial energy running through their life, being very intentional on how they directed the insurance company and then communicating to the insurance company, this amount of money goes in as a extra premium as more premium, more premium equals more capital, more capital accumulation, higher dividends, more future dividends, more compound potential, more death benefit, more tax free advantages like the list kind of goes on, but it all starts with that behavior. Clear instruction, application of more premium, more premium creates more results.
• 7:41
  Speaker B: Spot on. And what Richard is describing when he's referencing the late R. Nelson Nash and the book that he wrote titled becoming your own banker, which this book will absolutely change your life. One of the things that I experience and I know that you, rich and our teammates experience is that when people are wanting to get into a conversation, they want to discuss the infinite banking concept and they've developed some degree of understanding based on information that they've consumed, whether it's on social media, YouTube, et cetera. When there isn't clarity, and it's evident that there isn't clarity on the infinite banking concept and the essence of what it actually is, most often that person has not read Nelson's book. When we ask that fundamental question. Have you read the book titled Becoming youg Own Banker? Because the author of the book is the pioneer, the engineer, the developer of this concept. I didn't even know that book existed. Or no, I haven't read that book. That is obviously risky because if you do not understand the problem, the solution just won't matter to you. And if your behavior creates an outcome that becomes a financial disappointment, like borrowing against the policy, not repaying it, not paying your premium, how you avoid these risks altogether and how you set yourself up for long range success is that you follow R. Nelson Nash's golden rules. Golden rule number one, think long range, meaning think three generations past your own. Golden rule number two, don't be afraid to capitalize your system. Capitalizing your system means paying premium, repaying policy loans with more interest than what the insurance company calls for. Third golden rule is don't steal the P's, don't borrow, don't without the intention of repayment. Fourth golden rule, don't do business with banks. To the greatest extent possible. Control how you're financing the things that you need throughout the course of your lifetime from this place, not from the place of someone else's system.
• 10:03
  Speaker A: And then the beholden to someone else's rules.
• 10:05
  Speaker B: Right, exactly right. And the fifth being to rethink your thinking and why. What Nelson meant by that. You're approaching a, a new concept, new to you. It's been in existence for decades, but it's new to you. It's going to require a shift in your thinking because the, the fundamental truths will always be there. Your money must reside somewhere. Someone must perform the banking function as it relates to your needs. There are no exceptions. And so when people take a moment and they think through what are all the things that I've financed up to this point in my lifetime? And when I say finance, I mean paying cash, leasing, or having some form of structured loan or credit facility that you've used to finance something that includes.
• 10:57
  Speaker A: Things like your cell phone in your pocket, by the way.
• 10:59
  Speaker B: Yes.
• 11:00
  Speaker A: You're financing that with the cell phone company or Costco or wherever you bought it, and you're on a plan. Well, that plan includes essentially the finance charge for the cost of that thousand.
• 11:09
  Speaker B: Dollars phone and you're earning an income from some source. Maybe it's employment income or it's investment income. Nelson asks the question, and again we, we always go back to his book because that's where you get the clarity on the concept. And he asked the question, is it not true at present that all of your income is flowing through the books of someone else's bank? Well, of course that's true. We're addressing 99 plus percent of the general public. If you understand that fundamental truth, then you would, you would absolutely understand that your money must reside somewhere. What disadvantage would there be to controlling how you finance the things that you need throughout your lifetime? Well, logically a person would immediately say there are no disadvantages to being in a position of control. But the concept is often sensationalized where we're not describing solving a problem, we're describing some. This is the best thing before sliced bread and you can get rich buying cars, or you can have $1 doing the job of 2. And all this other misinformation that just simply is factually not true. And so the real risk is, is not having clarity, not fully understanding the essence of what the infinite banking concept actually is. In a ridiculously simple manner, it is controlling how you finance the things that you need throughout your lifetime and recapturing the interest that you would otherwise pay to someone else's bank or someone else's finance company. That's it. Ridiculously simple.
• 12:47
  Speaker A: Another risk, or I think it kind of ties into my magic bullet element a bit to a degree, is once you're in the process of implementing this and you're, or you're starting down the path sometimes, and maybe this is because of the marketing, maybe this is the way that some advisors run their practice. I don't know. But I think once people get down the track where they're starting and they, they, they really get, get connected with the idea and they, they love what they're, what they're seeing, but they, they tend to believe that it's going to do more for them than it will. So what I mean by that is you still need to go and build assets and create other things that are going to create streams of income for you. You know, so, so putting all of your, you know, once you, once you might realize, oh well, this does all of these things, I can put money in, I can borrow against it, it's got some growth attached to it, there's some tax free capacity on, like my family's protected with its death Benefit or my business is protected. You know, maybe I can draw passive income out of this later in the future years. Like there's all these things that it can do. So it's like it starts to feel like it's the Swiss army knife of financial products, which is good. It's got a lot of things in it. But it doesn't mean that, you know, if you look at a Swiss army knife and you want to just use the knife component versus you have like a skinning knife for fishing or hunting. Well, if you're hunting, you probably want the skinning knife for that task. And if you absolutely had to use a Swiss army knife, like, you might be able to do it in a pinch, but it's probably not the right tool for the job. Like, it'll do it, but it's not going to do the greatest job as the tool. It's 100% designed for that job. Right. You've got this Swiss army knife. So can you go use that Swiss army knife, in this case, borrow against it to go buy the right. The right skinning knife? You know what I mean? So, like, you can create these other things with this, this one thing. And so I think people tend to. They almost tend to. They. They realize there's almost like this peaceful element that comes with implementing this process. And they're like, oh, man, Jason, thank God I've got this. Now I can kind of coast a little bit on everything else. I can just sit back on the couch with a bag of potato chips financially and relax a little bit because I got this thing working for me. I'm like, well, sure, you could do that. But what are you missing out on by not activating that to try and generate more assets, more cash flow, more capac. More value? You know, you, Jason, you just recently bought a business. You've bought multiple businesses, and you funded business equipment and growth and expansion for your businesses, which is where you have the bulk of your investments. Your investments are in people, processes, technology, and businesses that create cash flow. That's kind of your model of the world. But you use the home base of insurance contracts, a whole lack of them, to be the financing machine for all that. And so the businesses and the various business entities have to produce a cash flow result, assuming that they're profitable. And that comes back to the machine. As the, as the loans go down and the policies go up, you can access and say, hey, I've got enough equity in the machine. Now I'm looking at other opportunities. The next business structure I'm looking At is this one. That's the trend I want to go after. So that is a way that you're creating amplification of your net worth, but you're not letting it just sit there, do nothing. And I think that that's a risk that people who are implementing the process tend to fall into a trap. They get comfortable and unfortunately being too comfortable means that there's no reason. All of your growth comes from some measure of discomfort. Right. That's how we grow as human beings. So you need to be prepared to be able to do that. It's okay that you have this thing in the background working for you, but you also need to be putting, putting elements of it to work in other areas of your life. That's just my personal thought.
• 16:39
  Speaker B: Yeah, I agree with that perspective completely. Because when I look at the beginning of our journey and when we connected with people who had already been practicing the process for several years, in some cases, we saw great people implementing this concept, sharing a wealth of knowledge. It was amazing. That's what gave rise to our inspiration to guide people and to mentor them and to help them. If our journey would have started where we didn't have access to really wonderful people, we had to get on airplanes and we weren't using tools like zoom or anything like that. We would actually travel to go and visit with these people and absorb and spectate and just learn the best way that we could by developing a lot of good insights and questions. So one of the risks with the Infinite Banking concept is not having a guide or not having a competent guide. And there are so many great competent guides out there, like across North America, there are some absolutely phenomenal guides out there. And when we developed that standard to say we're not just going to introduce the concept, get somebody to clarity, get a policy, or ideally a system of policies in place, and then just talk to them when they reach out to us. Like, we are very proactive. We have quarterly group client coaching. We do one to ones. We are very, very intent on being obsessed with our clients, but not being responsible for them. Like, the whole purpose of the concept is to develop an independence not to amplify your existing degree of dependence on other people to create a financial outcome for you. So I felt that that was a really important risk to share because the way to overcome it is to make sure that you're working with somebody who's proficient, who can demonstrate that proficiency. One great way to get a sense of it is when you're meeting with an agent and you feel like you're establishing a basis to work together, Ask not, can you show me how much premium you're paying? Because you know, hey, if, if your agent is paying 100,000 a year in premium, well, they must be remarkably proficient at the infinite banking concept. The infinite banking concept is a process, not a product. So what I would ask for, I would ask for a sample size of client testimonials and 100 or more would be a sufficient sample size because if you've done a Great job for 100 or more policy owners who are implementing this and you've been intentional about getting Testimonials from all 100 plus of those people, a pattern's going to develop in the feedback that these people are providing in the way of their experience with that agent. And the truth is, the majority of agents, whether you're practicing IBC or not, I'm just saying in general, the majority couldn't even produce a fraction of that quantity. Not because they're not proficient, maybe they're just not asking for the reviews, I don't know. But what would you rather have if you could sit down and get that degree of a quantity, of a sample size and you as the consumer start to see a very clear pattern? Richard is always answering all my questions when I bring them up. He works alongside a great team of people that are always there to help me. Whether Richard is available or not, I'm getting great service. I am educated and the education is ongoing. I get to meet once every 90 days with a group of like minded people. So I don't feel like a lone ranger. I have access to a portal full of resources to help me on this journey. You'll start to see that pattern. While that is definitely going to boost your confidence in working with that particular agent, the risk is, is that if you don't measure proficiency and you don't gauge it, the agent could have all the best intentions, which they do. Like I haven't met really any agent in my history where I thought they really don't have the best of intentions. Of course they do. They want to serve the people, they want to do really well and take care of people. But if you don't gauge proficiency, that is a risk because you could be led down a path, whether intentional or not. That could create outcomes that could be disappointing. And nobody wants that. The agent doesn't want that, you don't want that. So make sure that you're gauging proficiency. And a surefire way to do that is to ask for at least 100.
• 21:52
  Speaker A: Client testimonials there's an element of being like, I don't know if I would put this as a risk. It's more of like a risk in your discovery process, like when you're introduced to the concept and there is a lot of, as I think we refer to it, as Nelson would have referred to it, is noise. And so he says you need to develop financial noise canceling headsets so that, you know, when you're on the airplane and there's a screaming baby over there that you can put these on and you can just, you know, listen to something important or, you know, get some sleep on the airplane, that sort of thing. And so he felt that there was a ton of noise in the financial marketplace. Now, when Nelson talked about that, he was talking about the general broad financial marketplace, right? I'm talking more specifically to the marketplace around the promotion and promoters of the infinite banking concept, right? And there's trademarks attached to the infinite banking concept that's owned by the Nelson Nash Institute. And so they're, they're the, they're the source of that content. And those, those trademarks and people who are promoting that you can do this concept or infinite banking is better or something like that with, as an example, a different type of insurance product or not with a mutual company, et cetera. I mean, that's blatantly false according to the trademarks that are owned by the Nelson Nash Institute. So, so when you hear someone saying these kind of things, I'm like, no, wrong, wrong, wrong, false, false, false. Because it's actually tied and connected directly to a trademark that is owned by the Nelson Nash Institute. So to indicate those things or to take advice from people that are doing that is just completely wrong, doesn't mean that they might not have valuable and beneficial things to say. But to go and commingle things and not be, not honor and recognize a who owns those trademarks and babies where the source of that information belongs and who created this concept out of their brain, which is not whole life insurance. Okay? Whole life insurance has been around a long time because the concept and the product are two different things, okay? One is behavior. One is about behavior and the implementation over a lifespan of usage. The other is just, just a product. It's just a thing that you can buy. Anybody can go buy whole life insurance. Anybody can go buy any kind of life insurance they want as long as you're insurable. Like, go, go ahead and do that. But if you want to implement a process that's becomes a lifestyle in your life, that, that that is thinking long range and allowing you to do a lot of things that are very powerful financially. That's where the concept comes into play. And so there's a lot of people who are promoting the idea because it's, it sounds great and sounds marketable, but really all they're doing is they're promoting the sale of an insurance product and they're co mingling the idea that this is all about a product. And then it's like, oh, hey, look at these amazing illustrations. And I can manipulate my illustrations to look really great for you. How quickly can I get an illustration in your hands? Oh, what's that? I got an email from you that you're interested in the console. Boom, 30 seconds later, here's an illustration for you. Like, you know, I've never experienced that personally, Jay, but we've talked to all of our colleagues and that stuff is going on out in the marketplace. And I'm like, I just, I couldn't even believe that. Like, how does that, how do you even run a business like that? I have no idea how that is successful for people. But if anything like that has happened to you, like, that is clearly, that's clearly a risk. Like, that should be a red flag to you. What's that? You had 30 seconds of email communication and an illustration with a bunch of numbers with no context and just saying, this is the right path for you. This is how. This is how we design them all. This is how they're all meant to be. This is the right way to do it. That should be an immediate red flag to you. That is a risk. If you're going down this process of learning and you're seeing things like that, yes, you should be concerned about that and you should take the time to pause and go do some more due diligence because you have to look out for you and your family. That is important. You, if you've done anything around this process without having a copy of this book in your hands, you probably got off to the wrong start right out of the gate.
• 25:54
  Speaker B: Very good point. And so, so here's, here's the bottom line. The infinite banking concept. It does carry real risks that Rich and I have gone through in this video. And you can see now they're not the kind of risks that come from the concept itself. They come from not having the right coach in your corner, not recognizing that the policy owner's behavior is far more critical than the behavior of the insurance company, and not, not reading R. Nelson Nash's book. And when, when you eliminate barriers the infinite banking concept. It shifts from something you buy to something that you're implementing for a lifetime. And given that you're still watching this, it's, it's not an entertainment for you. You're looking for a better way to control how you finance the things in your life for your family, your business, to create a bigger future financially, that one that's peaceful, one that's stress free. That's why the next step is simple. Just create a time, have a conversation with the right person on our team. No pressure, no gimmicks. But don't take my word for that. Go and read some of the thousands of reviews. So you're not just getting 100 sample size, you're getting thousand thousands. And we'll just have a real conversation about your, your situation and whether this concept is the right fit for you. And so just click the link, pick a time, and get into a conversation. Because if you're really, truly serious about creating a financial future that's bigger than your financial past, this one conversation could be the most valuable time that you have. And so if you find yourself thinking, okay, yeah, this is something that I really want to explore, then getting into a conversation is the right next step. Rich, this was fun and I'm glad that we were able to share this with the viewers today.
• 28:08
  Speaker A: Tired of having your farm under the control of someone else, like a bank? Well, the only way to stop that is to take control. Get this book right here. Growing your own capital. They're going to teach you exactly what you need to know so you can keep the farm where it belongs with you and your family. Go to growyourowncapital.com that's growyourowncapital.com.