Fake TV shows: good or bad for our industry?Article added by Roccy DeFrancesco on October 16, 2009
Roccy Defrancesco

Roccy DeFrancesco

MI

Joined: May 24, 2006

In a recent article, I told you about a reverse mortgage/life insurance sale that I did not think was "suitable" or in a client's best interest. In this article, I'm going to discuss "fake" TV shows.

What is a fake TV show?

A fake TV show is exactly what it sounds like. It's a TV show produced by a non-independent studio for the sole benefit of the person being interviewed or on whom the show is focused. Another name for a fake TV show is an infomercial. What's the difference between an infomercial and a fake TV show? The infomercial disclaims that it is an ad made for TV, but the fake TV show is made to look like a real TV interview show and makes no attempt to disclose the fact that it's fake.

Ironically, the goal of a fake TV show is to give the person interviewed more credibility. It's ironic because, if the consumer watching the TV show knew it was intentionally created to look like a real show when it's really not, it would have no credibility.

A real life example

Recently, a friend forwarded me the following Web site: http://www.speedofwealth.com/home/videos. On this page, you'll find a few TV shows that appear to be real shows. You'll find interview shows conducted by a firm called "leading experts." When I went to the Leading Expert's Web site, the sales pitch was that you could "star in your own 30-minute custom TV show..."

I recommend you watch the TV shows and see if you think they were designed to disclose to consumers that they are staged or fake, or if they seem to be designed to give the impression that they are a real-live interview show. The answer is clear to me.

What does it matter if people use fake TV shows?

While I didn't think the Dateline NBC show did a good job with its hatchet job on advisors selling FIAs with fake articles written in fake financial journals, it did allow FINRA and others to label insurance professionals as scammers and scum bags; and the industry is still dealing with the repercussions of that negative press.

I personally think fake TV shows are not good for our industry, and I want to warn advisors that when you get involved in such things, you run the risk of becoming infamous, instead of rich and famous.

Missed Fortune 101 wannabe?

Wayne McKelvy is the person in the TV shows. In one video, he mentions Doug Andrew; and he discusses removing equity from a home to fund cash value life insurance. Surprising? Not really. I signed up to become a member of his Web site, and I nearly got ill listening to his "secret" wealth videos.

He seems to have all the Doug Andrew lines down: home equity has no rate of return (mathematically incorrect and patently false); equity in a home isn't safe; and of course my favorite, "I'm not a tax advisor," but you can write off the interest on home equity debt when repositioned (notwithstanding Title 26-264(a)).

Triple arbitrage

Some of his videos are scary, when he talks about getting what I'll call a triple arbitrage.
    1) Borrow idle equity from a home and "invest" in a cash-value life insurance policy (EIUL), where it will return more than the cost to borrow.

    2) As soon as the EIUL policy has cash value, borrow from it, and you'll get a positive arbitrage on the "variable loan" in the policy.

    3) Take the borrowed funds from the life insurance policy and then invest them in some magical green investment making 17 percent a year. Again, you'll make more money on the investment than the insurance company is charging you on the loan.
Hmm. What do you think FINRA would think of this? What do you think a state department of insurance would think of this? The real question is, what do the insurance companies he's using to sell EIUL policies in this structure think of this?

Disclaimer

I have not talked with Mr. McKelvy. I have not talked with any of his clients. I have not seen a plan he has specifically designed for any client. What I have done is what any of you can do which is to go to his Web site and review his free videos. I recommend going to http://www.speedofwealth.tv/ and watching the in-person seminar he did this summer in Chattanooga, TN. I'm confident that you can determine for yourself if he even fully understands how EIUL polices work.

I don't have time to create another "what's wrong with the Web site" piece like I've done previously, but if I did, I would have plenty of material.

Am I picking on Mr. McKelvy? I suppose I am, but when I see an opportunity to make an educational point to readers that can help keep them out of trouble, I like to take that opportunity.

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