The primary responsibility of insurance and financial advisers: Who is your clients' real financial adviser?Article added by Jeffrey Reeves on April 29, 2011
Jeffrey Reeves MA

Jeffrey Reeves

Denver, CO

Joined: March 24, 2010

My Company

EUREKONOMICS[tm]

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The simple truth is that your client and you are your clients' best financial advisers — but only if you are willing to discard the conventional wisdom that has lead our entire economy and the personal economies of many Americans into a swamp of debt and a maelstrom of misused money.

Common sense vs. conventional wisdom

Wall Street and Washington have used Madison Avenue advertising to mislead Americans. What was common sense for millennia has been replaced by conventional wisdom in less than half a century.

Think about it for just a moment. Ancient texts like the Torah and the New Testament, as well as modern classics like George S. Clason's “The Richest Man in Babylon,” and Benjamin Franklin's “The Way to Wealth,” are either ignored, manipulated or maligned by those who would gain control of your clients' money to assure their goals are met at your and your clients' expense.

What really is important

Frank Luntz's bestselling book, “What Americans really want,” posits that there are "five lifestyle attributes that really matter ... more money, fewer hassles, more time, more choices, and no worries."

That brings us to the title of this article, “The primary responsibility of insurance and financial advisers: Who is your clients' real financial adviser?”

The title of this article implies Americans need and have a financial adviser. That's the foundation of the conventional wisdom paradigm that has America in its grasp; a model that suggests the typical, everyday, average American is not educated, informed or intelligent enough to manage their own finances. That some stranger on Wall Street with only a modicum of education and training is better equipped than you or your clients to make decisions about your clients' money.

The simple truth is that your client and you are your clients' best financial advisers — but only if you are willing to discard the conventional wisdom that has lead our entire economy and the personal economies of many Americans into a swamp of debt and a maelstrom of misused money.

Your primary responsibilities:

  • Your clients' family must be your first responsibility.

    If a breadwinner in a family dies or becomes disabled and the only legacy s/he leaves is debt and a pittance in a retirement account, the family will suffer. Therefore, your first responsibility is to make certain your clients acquire and maintain both the correct amount and the right type of life and disability insurance to protect their families from financial disaster.

  • Second, there's a conventional wisdom myth that paying off the mortgage on a primary residence is somehow unwise. It isn't. In 50 years dealing with small businesses, ordinary American families and other financial advisers, I have never met a financially successful person that held the belief that paying off the mortgage is a bad idea. Help your clients organize their finances to pay it off and imagine the peace of mind burning the mortgage will bring to them and you.

  • Third, make it a top priority to guide your clients to save as much as they can in whole life insurance policies from mutual companies and in their local credit union — both depositor owned businesses.

    This creates readily accessible pools of money that your clients control. In addition, the growth of savings in whole life insurance policies are free from taxation, are equity for policy loans at very low rates, and can be converted to tax-free income later in life.

    Your clients need to lay a foundation of money they control. That means putting money in a mutual fund, IRA, 401(k) or equivalent, allowing it to be held by an investment manager, REIT, or in any financial vehicle that restricts your clients access to their money is inappropriate for use in your financial foundation.

    Conclusion

    Peace of mind about money is a pretty simple achievement because it is based on simple principles and practices that have been known and used for thousands of years. The disinformation and clever advertising of the past four decades have muddied the clear waters of common sense.

    However, the simple wisdom and clear thinking upon which the founders built the American ethic are still readily available to anyone who is willing to suspend belief in the tenets of conventional wisdom, which is no wisdom at all.
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