April 11, 2025

After 25 years in the industry, agents and advisors never seem to surprise me. I feel like the biggest problem that we all have is the being in our own way. One has to be able to understand exactly where they are in their career, and what they can and cannot do. The “pick me” mentality doesn’t get recognition from peers for very long. You may get your name spoken in front of a group, but the first time you are asked to do joint work with someone, it will be the last time.

Not to pick on IMO’s, but they were not created to give advisors choices in products. They were created to exploit uneducated advisors. I am not saying run and join a captive agency. You can do what you want with your career. However, the advisors that I have personally worked with that come from the IMO side are less educated on process and totally focused on illustrations which are drastically manipulated. They dangle a carrot in front of the advisors, and it starts looking really attractive. To actually think an insurance carrier will give an independent advisor more money that a career agent doesn’t make sense. You have to look at all things. Commissions, renewal, bonuses, benefits, retirement, book ownership, training, education, home office support, the list goes on and on.

Thet broke advisor is always looking for the highest payout up front! If you take a deep dive into the MDRT top producers, you will see really quickly that the top producers are with just a handful of insurance companies. If the payout is less, then why would the top producers be with captive companies?

Advisors get caught up in the pennies and step over the dollars. It’s because the value and education that comes from home office advanced planning teams is much better than what can come from an IMO. Only the uneducated advisor doesn’t get it. One doesn’t know what they do not know. As simple as that sounds. The bigger the case, the bigger the greed sets in. I can spot it a mile away. It happens every time, and then the deal gets lost, and the advisor is “broke” again. It is a cruel cycle, and you would think that after a few years advisors would understand. I was able to witness a firm recruit people to the lowest commissions in the industry, and advisors begging to work with them. What would be the reason? Why would someone do this to their career? The opportunity that this particular firm has was unlike no other. I am not going to go into the details, but it wasn’t about the commission percentages but about the size of the cases and the volume of opportunities.

There are times where great advisors may leave the captive space if they are wanting to run their own agency, and they may not be able to get a GA contract in their area. This is not the scenario that I am talking about. I am talking about the agent that really believes that different products serve different purposes. “This carrier is better for this situation.” It’s a scam, and it will cripple your career.

We can get so focused on the payouts and miss the process that really makes the big money. Reading a Yelp review doesn’t tell you anything about the reputation of an insurance company. Do they pay their claims? What is their AM Best rating? Are they solvent? Where do they invest their capital? Do we all just forget about 2008? The market tanking and the mortgage problems? Who was responsible? That will not be on a Yelp review. These magical companies selling these magically products will not stand the test of time, and neither will the advisors that sell these products. There will be blood in the streets again. History repeats itself, and it will not skip this industry.

If you really want to play at the highest level, your mentality has to change. Everyone wants to be the boss, but are you willing to do boss things? Creating a company name may make you feel incredibly good about what you are doing, but is it really getting you where you dream to be? It’s just a name and a logo. Are you really building something that someone wants to be a part of? Something that is valuable? Take a long and hard look and now let’s change everything!

by Brent White

February 28, 2025

Lost Opportunity Cost

Not only understanding lost opportunity cost but knowing how to recapture the capital in a business plan is 100% the key to success. I feel that one cannot understand this after one basic explanation. There really needs to be a deep dive. The $100 steak dinner that you have tonight, if you had stayed home and invested that capital somewhere and received a return, then whatever that number comes to over whatever period that you want to measure is only part of lost opportunity cost. Most of us feel like this is what a lost opportunity is. I believe there is way more. I believe there is the lost opportunity cost, plus the money multiplier effect.

I want you to read that part again. There is the lost opportunity cost, plus the money multiplier effect.

I am going to try to explain this with one example. This concept has taken me many years to completely grasp. So, here goes.

We are going to take a business owners auto policy. We are going to recommend they raise their deductibles from $500 to $5,000. By doing this, we can reduce their premiums from $50,000 to $25,000. Saving the client $25,000. If we take the $25,000 and invest it somewhere and can receive a 6% return, then that money would grow to $974,818 and some change in 20 years. However, the client is taking on up to a $5,000 risk per claim. Every time there is a claim no matter the size, up to $5,000 then the client must pay out of pocket.

Our minds go immediately to the savings and the risk tolerance of the client, and maybe the client can afford to take this risk. This mentally is totally WRONG! For this strategy to work and we are going to recapture the lost opportunity, then we must place savings somewhere it can be accessed without interrupting the growth of the capital even if there is a claim.

There is more!

The money multiplier now comes into play. As the money is growing, we can use it for other things, such as paying for inventory or paying for a buy-sell agreement. The options are limitless, and so is the growth of the money. This is where all traditional advisors cannot come close to this type of planning. They are simply chasing returns in the market or searching for tax deductions. Creating a better machine and recapturing loss of capital to reinvest back into their business will beat any other strategy every single time.

As the balance grows, the business owner now can do the same thing with other things going on in the business and recapture more money and create another velocity. Money in motion stays in motion. ANYTHING and EVERYTHING a business owner pays for has a lost opportunity cost associated with it. One either gains interest or pays interest, in our case they are a wealth creator and operate similar to the way that bank operates.

There is more. If we interrupt the growth and use the capital somewhere else, then we do not achieve the recapture of all the lost opportunity. The money must grow without disrupting the compounding, and we still must be able to use the money for something else. Dividend paying, cash value life insurance with indirect recognition has such a feature. Any other solution just does not work the same way or requires bank loans.

The Financial Four Square was created to help advisors identify issues and redirect the lost opportunity cost and to create money multipliers.

The volume of returns is much greater than the rate of return that traditional financial advisors are chasing. The magical, and fictitious, indexed product that promises market upside and no downside just are not real. They do not work this way, and Strategy will outperform rate of return every time.

by Brent White

February 23, 2025

Industry specifics and Issues:

There are almost 6000 insurance companies in the United States. How on earth can someone that does not work in the insurance industry give product or coverage advice on an industry of this size without being immersed in it every day? It is impossible. This is why there are specialists. There are almost 6000 stocks on the stock exchange. Why would one ask your neighbor about what stocks they are buying after he or she works 8 hours at their full-time job? This process is not even rational, but it is what we do in today’s world. Our country is full of armchair quarterbacks. Everyone has the answer in hindsight. Our team has the answers today because we take a macroeconomic approach, and then we take microeconomic specialists to fine tune one’s business.

Multiple sources of Income

If a business planner specialist wants to be successful in this business, they are going to need multiple sources of income. Notice that I did not say they need to sell multiple products. What I mean by this is that when I am working with a client and my team has determined that the client will need employee benefits, my employee benefit specialist will do what they do, and I will in return get a piece of the commission if I am properly licensed. I will focus on what I do best, and that will be the bulk of my pay. I will not “refer” business to someone to help my client and not be compensated and you should not either. There are five major sources of income in business planning. One is life insurance. Two is disability insurance. Three is property and casualty insurance. Four is employee benefits and retirement planning. Five is investments. “If you are the rain maker, make it rain.” I must say again, one must be licensed to receive any commissions. Check with each state’s law to confirm.

Team Model

Creating a team in this industry is not as simple as one might think. For example, if I want a good property and casualty agent on my team, where would I look to find one? In the business owner space, I would not go to a Farmer’s or a State Farm agent. Not to pick on these two, but I need an independent agent that specializes in commercial insurance only. If the p&c agent tells you that they sell personal lines as well, then they are not the right person for this job. Partner with someone that only sells commercial insurance and has a team of their own. Stay away from the big box shops. It can be difficult to share work. After you identify the right P&C agent, we now must train them in business financial planning. This is the hard part. Because they only focus on coverage and price, we must teach them financial strategy. Thay must be on board with the concepts and strategies that one could be using. Example: If part of our strategy is to raise deductibles and self-insure some risk to lower premiums, then a business owner must have those savings set aside to pay a claim for their portion of the risk. I have had property and casualty advisors tell me they use this strategy on a regular basis. My question to them is “where did you put the money.” There usually is no answer to this. My point is this, they must be trained. This is the same for your other specialists.

Knowing that the 80/20 rule is probably in effect in everything I do. I must learn how to operate doing 20% of the work and let my team do the other 80% to achieve success. If I am doing half the work, the numbers will simply not be the same. I will not achieve maximum success. I need to be 20% of my total team to create the best scenario for myself. If I am doing more than this, then I am cheating the principle and probably not performing at my peak. Trust the model and build a solid team.

I had issues with believing that I could compete because I didn’t have CPA or CFP behind my name. I worked in one of the largest CPA firms in America with over 5000 CPA’s and 500 CFP’s and I can promise you this, none of them can compete with my team. I have spent the time and energy to go learn this for myself and the worst part is that I had it the whole time. I didn’t believe in myself. This journey has tought me everything I need to know about believing in yourself. Build your team that has your back. You must put in the time. Like Kobe Bryant said, “why would I pass you the ball when I have seen how you practice.” This is not just another book. It is the playook for business planning that can separate you from all of your competition. You have to put in the time to become a star piece.

Kobe is not going to pass you the ball, and you are going to blame him. Put in the time. Know what your teams capibilites are. Learn from these people. Study previous cases. Ask questions. LEVEL UP!

I will not be the person that you see today when you see me tomorrow. I am not the person I was 3 years or even a year ago. I will keep growing, and I will learn what I do not know. A 50/50 work life balance by definition is mediocre. I will rest when my work is done and not until then. Do your job and trust your team, and great things will happen to you.

by Brent White

February 19, 2025

Go-it-alone!

Too many times, in my career I have heard the phrase “eagles soar alone, buzzards go together.” I do believe this to be true in many cases. Our industry is not one of these instances. To be a top producer, you will need a team of people that do the things that you do not do well. Early in my career I was paired with a veteran producer who just so happened to be the top producer in our Dallas, Texas agency. He truly was an eagle, or so I thought. I did learn so many things from this advisor. Staying busy with what you can control was the main thing. You cannot make people buy. You cannot control their personal life. You cannot make them like you. All you can control is how many potential clients you can get in front of. This was my model for years. However, I do not think my preparation was as good as it could be. My message was not easy to duplicate, and my results were up and down. I will show you how to beat the “go it alone” narrative as we progress through the upcoming chapters, so that you can build your team and get to the top.

Education

Working in the business owner space is not an easy task. You really need to know how a business operates. Justin Waller is a famous social medial personality, and a multi-millionaire once said: “if you are going to be in the construction business, you better understand property and casualty insurance.” Notice he did not say: “You better understand investments or banking.” I am not taking a jab at those industries, but most businesses that we see fail because of their property and casualty premiums and how they pay for these premiums. If you are going to work in the business owner space, you must learn about other aspects of financial services. You do not have to be the experts in these other specialties, but you need to know as much as your client if not more. Educate, educate, educate. Learning other pieces of the financial services industry has changed my career, and it will do the same for you.

Justin Waller Podcast

Focus

Create a clear path on what you are selling. When I am asked “what I do for work,” my answer every time is: “I do business financial planning.” This is what I want to do every day, and I spend all my time focusing on doing this. From business cards to webpages, my focus is noticeably clear on what I am doing. My goal with a new client is to sell them on the fact that I need all their information. I know that this step alone is getting a commitment from the client, and from here I can uncover all the issues and help my client in the best way. I do talk about products, only concepts of efficiency and reducing risk to redirect loss of capital.

Jack of All Trades

Our industry has created a lot of “jack of all trades” advisors. If someone asks me about a Medicare solution, my answer is “I know someone that specializes in Medicare, let me introduce you to them. I work in business planning and consulting.” If someone asks me about home and auto insurance, my answer is “I know someone that specializes in the person lines insurance that is incredibly good at what they do. Let me introduce you to them.” You get the point. You will never play at the level you want to play at until you take on this mentality. Tom Brady does not kick field goals. He does not run the ball. He does not catch the passes. He throws touchdowns and wins Super Bowls. Be the quarterback…. They get paid the most.

Solutions

Specific Direction

The entire purpose of the 400k playbook is to teach someone how to work in the business owner space at an elevated level. There are extremely specific reasons that we choose this path, and specific ways on how to execute with specific intent on what we are trying to accomplish.

Playbook

We know everyone cannot replicate the eagle; however, we can replicate the playbook. This book will give you a step-by-step guide along with marketing materials to help you build your career.

Team

It will take a team of people to accomplish working with business owners at an elevated level. The jack of all trades model will not work. Our team consists of financial advisors, insurance agents, group benefits advisors, property and casualty experts, home office attorney’s and CPAs, and of course the quarterback. If you add up our entire team, there are probably over 500 people supporting each client. If you were a business owner, do you want a lone eagle helping you? How about you represent your teams of eagles that have specialties that they soar in, and you are the person that brings it all together with the comprehensive plan? This is how we approach every client and win at the highest closing rates in the industry.

Partners

You will need many partners to be successful. We have partnered with major insurance companies that provide products and support at the highest level. These companies need advanced planning teams with great attorneys and accountants. You will need specialists that do the things that you cannot do. You will need a commercial property and casualty team. You will need a retirement planning specialist. You will need a disability insurance specialist. You will need a life insurance specialist. You cannot do this alone. If you attempt this then you will fail. Remember the 80/20 rule.

Execution

It is down to us as individuals now. We have a plan, a model, a team. The only thing left to do is execute. Imagine yourself 22 years old. If I were a recruiter and told you that if you can get 15 to 20 business owners to fill out a questionnaire, then you can expect to make 400k a year, how fast would you join our team? You will sign up tomorrow. Guess what? We have this opportunity!

by Brent White

January 31, 2025

It is common for financial professionals to go through challenging times. I know that in my career I have had struggles with staying focused and have a clear direction. I always felt like there was a better way to do business. After becoming fascinated with documentaries of people doing extraordinary things, there was only one person that really stood out to me. His name is Nimsdai Purji. He is a Nepalese mountain climber who set out to break the record for climbing the world’s 14th highest mountains which previously took 7 years by Reinhold Messner from 1979 to 1986. Purji was able to accomplish this feat in less than 7 months.

The Netflix documentary is “Nothing is Impossible,” and it is a must watch. The purpose of me telling you about this was to tell you something else. More people are getting to the top of Mount Everest than ever before. There are many reasons for these numbers. The first reason is that the more climbers get to the top, the more experienced climbers that there are to help others get to the top. This is the same for financial services. The more advisors that have success, the more experts there are to teach others. The second reason would be climbers have found the easiest routes. After years of trying diverse ways to the top, Climbers can now map out the easiest routes. This is the same in financial services. Over time, we tend to find the easiest routes to success. Copy what someone else is doing and have the same success. This only makes sense, right? The problem with these statements is that we all have different educational backgrounds, and different skill sets. Copying the world’s best salesperson is not going to make me exactly like them. I may pick up the language. I may pick up the ways to say certain things, but I will never be that person. To think this model is replicable will only lead to failure. This is one of the main problems in any sales industry. We are all different, so it makes it extremely difficult to copy what someone else is doing. I have seen this in our industry numerous times. The top salesperson teaches the class, and very few can copy what they do and get the same results. If this were true, then I should be able to take Tiger Woods’ Golf clubs and coach and break course records. My game may improve drastically, but I will never be as good as Tiger Woods. We must create a system that can be replicable, and experts to surround ourselves with. This is how you climb Everest.

Climbing Everest is one thing, but our goal is not to climb the mountain. The goal is to climb the mountain and come back down. The interesting stat about the death rate at Everest is that 80% of the deaths happen on the way down. Around 80% of all business owners fail as well, and I feel there is a direct relationship between these numbers. The technical term is called the Pareto Principle, or the 80/20 rule. I call it dedication and preparation. I really do not think that anyone that climbs Everest or opens a business, plans to fail. Everyone is dedicated to the success of their journey. I do feel the failure rate is due to the lack of preparation. You must know what is ahead of you to be prepared but also plan for what you do not know. Our jobs are to help clients reach their maximum potential while reducing risk so they can focus their efforts on their tasks at hand. Their job is to execute their skillset. Together we want to maximize their potential and help reduce risks for the client.

This playbook is going to show you how to laser in on Focus, Dedication, Preparation, and how to surround yourself with experts so that you can climb your Everest.

BOSS FINANCIAL Group

by Brent White

November 3, 2024

ERISA at 50: A New Era of Fiduciary Accountability for Health and Welfare Plans

OCTOBER 1, 2024 From USI

As the Employee Retirement Income Security Act of 1974 (ERISA) turns 50 this year, recent litigation and a Supreme Court ruling provide a glimpse into what the future of ERISA may hold for health and welfare plans.

ERISA was originally thought of as legislation that governed retirement and pension plans for private-sector employers in the U.S. However, the law’s more recent history highlights an increased focus on its application to health and welfare plans. This includes various amendments that directly affect health and welfare programs, including:

The Consolidated Omnibus Budget Reconciliation Act (“COBRA”), which imposes continuation of health coverage requirements.
The Affordable Care Act (“ACA”), which has provisions that eliminate lifetime dollar limits and preexisting condition exclusions, while mandating preventive care and other requirements.
The Mental Health Parity and Addiction Equity Act (MHPAEA), which prohibits health plans from imposing stricter limits on mental health and substance use disorder benefits than on medical and surgical benefits.
The No Surprises Act, which addresses balance billing and enhances transparency in health plans.

Currently, ERISA’s application to health and welfare plans has garnered significant attention as plan participants call into question the actions of plan fiduciaries through class-action lawsuits.

Recent Litigation Targets Decisions of Plan Fiduciaries

ERISA applies to most employer-sponsored benefits, setting forth specific standards governing how fiduciaries of ERISA-covered plans must act.¹ Recent class-action lawsuits filed against large corporations like Johnson & Johnson and Wells Fargo reflect a new wave of litigation challenging plan fiduciaries around their duty to act prudently in selecting and monitoring plan service providers, such as pharmacy benefit managers.

While the outcomes of these cases are months, if not years, away, there will be a heightened burden on plan sponsors to understand their fiduciary obligations and administer plans accordingly as we move into the next 50 years of ERISA.

USI clients have access to our “ERISA Fiduciary Responsibilities” compliance guide, which includes an overview of fiduciary requirements, a compliance checklist, and sample documents.

While plan fiduciaries should continue to carry out their fiduciary requirements, a recent Supreme Court decision puts plan sponsors in a new regulatory environment.

Regulation in a Post-Chevron Environment

On June 28, 2024, the U.S. Supreme Court held that the Administrative Procedure Act (APA) requires federal courts to exercise their independent judgment on whether an agency has acted within its statutory authority and can no longer defer to agency interpretation of the law.

This decision overturned the long-standing precedent established in Chevron U.S.A., Inc., v. Natural Resources Defense Council, Inc. (“Chevron”), which required federal courts to defer to an executive agency’s reasonable interpretation of ambiguous statutory provisions that the agency administers (often referred to as Chevron deference).

For health and welfare plans, statutes often leave little guidance on how compliance requirements are to be implemented. Historically, agency rulemaking and sub-regulatory guidance had provided a pathway for employers. However, in a post-Chevron environment, the door is open for new challenges to agency interpretations. Given the lack of deference afforded to their interpretations, the decision may also impact how agencies approach the rulemaking process and their willingness to issue guidance on various matters. Going forward, employers will need to pay careful attention to court decisions along with agency rules and regulations to meet compliance obligations.

For 50 years, ERISA has established the framework for employers sponsoring health and welfare plans to follow. Now health and welfare plans will be at the forefront as employers are challenged to wrestle with rising costs and added compliance complexities.

How USI Can Help

USI’s National Employee Benefits Compliance team, comprised of locally based, nationally networked benefit attorneys and specialists, provides clients with a wide range of services and solutions designed to help meet compliance obligations and avoid penalties and fines. Our solutions — such as checklists of common federal notice and disclosure requirements, compliance guides, and explanations of regulatory requirements — can help employers identify and mitigate gaps in compliance.

To celebrate 50 years of ERISA, USI’s National Employee Benefits Compliance team offers a checklist highlighting some key compliance items for employer plan sponsors to consider for 2025 renewals. Click here to access the checklist.

To learn more about these and other solutions designed to help you improve adherence to regulatory compliance and avoid penalties and fines, contact your local USI benefits consultant or email ebsolutions@usi.com.

¹ERISA does not apply to governmental plans, church plans, or dependent care assistance plans, among others.

ERISA at 50: A New Era of Fiduciary Accountability for Health and Welfare Plans

by Brent White

December 26, 2023

After only 5 years in business, almost 50% of all business fail. To say that the odds are stacked against you from the start is an understatement.

According to business owners, reasons for failure include money running out, being in the wrong market, a lack of research, bad partnerships, ineffective marketing, and not being an expert in the industry. This is according to Investopedia.

I happen to feel like some is this is not the case. “Not being an expert in the industry,” for example. I know a lot of experts in their industry that fail due to lack of business knowledge alone. They may be an incredible plumber, but terrible at taxes, payroll, accounting, etc. This would cause them to fail at running a business.

Bad timing could be another reason. What if you opened up a fast-food chain today and the spokesperson for that food chain did something that landed them in the news. I think we all can name a couple of those. If one had just started this chain, could that make them fail? Of course, it could.

I personally feel like there are multiple reasons that business owners fail today. They may not be what you think.

Here are a few:

Not starting with an end goal in mind
Trusting the wrong advisors
Using the same strategies that cause 50% of all businesses to fail in the first 5 years
Financial organization
Understanding insurance thoroughly

You have to start your business having an end goal in mind. This helps with retirement strategy and product selection, along with tax strategies. Trusting advisors that do not see the complete picture could cost you and your business thousands of dollars. Usually more! A business owner can’t do the same thing that other business owners are doing and expect to have a higher probability of success. Let’s not just leave it to luck! I see in most cases that financial organization alone is very costly for businesses. Get everything together in one place where you can make decisions and see how it effects other parts of your business. when is the last time your financial advisor sat down with your insurance agent and CPA? I already know the answer. One can’t attempt to do business financial planning without including the Property and Casualty insurance piece. A planning TEAM must make sure that in the event of a claim that the company is not devastated.

My team uses the 4 Pillars. A comprehensive planning tool that helps us make decisions that maximizes returns while reducing risk and creating options at exit Giving a business a higher probability of success.

If any of the legs of the pillar crumble, the whole business can fall. Build a better overall strategy, and have a better chance at success.

by Brent White

February 13, 2023

The initial stages of solopreneurship will look similar to starting any other type of small business. Yet there are important, specific factors to keep in mind. Here is a list of resources to help you get started:

Dream Big: Think about what the perfect scenario is for your business 3,5, and 10 years from today.
Study: Learn how to use a bookkeeping software. Learn how to do payroll, inventory, and costs.
Protection: Make sure you have an insurance strategy in place, not just policies.
Know when to outsource: Do what you do best, and let experts do the things that you can’t do.
Watch Costs: Learning the term lost “opportunity cost” will change how you look at everything that happens in your business. If you can save the money, then you can redirect it to other areas of your business.
Ask for help: Partnering with us, we can develop more than just a plan. We can create a strategy to recapture “lost opportunities” to make your plan stronger.

by Brent White

December 22, 2022

In 1897 Travelers wrote their very first auto insurance policy to Richard Loomis. Gilbert J. Loomis, of Westfield, Mass., was a mechanic and early auto pioneer. Loomis actually built the vehicle he insured. Loomis bought his first policy from Travelers in 1897 and remained a Travelers policyholder for more than 60 years. The cost of his original policy was $7.50. For this premium, Loomis purchased $1,000 in liability coverage.

SOURCE: Travelers Property Casualty

The interesting thing about the car in the photo is that If I owned this Automobile today, Travelers probably would not insure it. I would have to go to a specialty insurance company.

Classic risk management acknowledges four ways of dealing with risk after establishing a risk matrix: Avoid, Reduce, Transfer and Retain or Accept.

Reference:

De Loach, J. W. (2000). Enterprise-wide Risk Management: Strategies for linking risk and opportunity. London: Financial Times/Prentice Hall.

As a consumer, when we purchase insurance, these are factors to determine our premiums. Insurance companies make an offer based on your risk, and then determine how much you are willing to retain. There are then factors like the probability of there being a claim, and at what impact. Insurance companies then spread this risk across multiple policies using the law of averages. The more premiums brought in, and the less money paid out is part of what determines the profitability of an insurance company.

The more risk the insured is willing to take, the less the premiums. This would be an example or “retaining” the risk.

“Avoiding” risk would be not having the ability to have a claim completely. For example: Selling your car. Now you do not need the insurance.

If one decided to take out a policy with 100% coverage, that would “transfer” risk.

If the insured decided to have a deductible or retention, this means they are willing to “reduce” their risk to a certain predetermined amount while paying a premium to let the insurance company retain that risk.

Understanding risk is forgotten by consumers in today’s world. Extremely low deductible and retentions are used to keep from coming “out of pocket” to pay a claim. While doing this the insured is potentially prepaying for expenses that could occur.

PROBLEM 1: OPTIONS

I met with a client recently who has a 3.5-million-dollar home, and then he own’s another 3-million-dollar vacation home. His premiums were almost $40,000 a year with a 1% deductible. The client was not willing to take much of the risk. With a 2% deductible, the client would have lowered his insurance premiums to $10,000. That is a $30,000 savings.

Let’s do the math. That is $30,000 in savings. If the client has a claim, he will have an out of pocket for $60,000 which is a 2% deductible.

If the client kept his original policy, he would have had a $30,000 out of pocket deductible which is 1%. However, the client had to pay the addition $30,000 in premium to get to the 1% deductible! So, the conclusion is the client is giving capital to the insurance company to hold because he has never been shown another way to have put the savings aside and not spend it.

Over 20 years, the savings would be $600,000 just in premium cost. With the lost opportunity of the money at 6%, it would have grown to $1,103,567.74!

The client was willing to give up $1,103,567 as has not made a claim in over 20 years. Not only has he transferred the risk, but he has also transferred over a million in capital to the insurance company.

Understanding risk and things one can do is detrimental to achieving financial success. What if there was a way to go to a 2% deductible to reduce cost and have a liquid place to save the difference to cover an unexpected tragedy, while creating a system that allows one to reduce insurance cost, finance charge, and creating wealth? Such a thing does exist, and we will talk about it in the next few topics.

PROBLEM 2: MINDSET

The second problem the client has is that he pays a monthly premium for the policy. Some carriers will pay as much as 10% for a discount on an annual payment.

In reality, you are financing your policy over the 12-month period of the policy. 10% interest, correct? The answer is no that is not correct. That is a little over 11% of an increase. If the premium is $10,000 a year, but if one pays in full there is a 10% discount. That makes the premium $9,000. $10,000 x .10 = $9,000. The problem with the human mind is that we are trained to think we get a discount if we pay in full. The truth is, there is a finance charge if we pay it over time. Our minds are trained to think the opposite. The premium is $9,000. If we pay over twelve months, the premium is $10,000. A 10% finance charge on $9,000 would only be $9,900. We are still $100 short of $10,000. The percentage rate is 11.11% of the $9,000 which is $10,000. The point is our minds are not trained to look for finance charges. In reality finance charges are associated with everything we pay for.

Have you ever heard someone say they got 0% interest on the new car purchase? There is not such a thing. It is usually 0% or a rebate. If the advertisement reads: 0% interest or $3,000 cash back for approved buyers, then the cost to get 0% was $3,000 plus your good credit. If it were a Ford advertisement, then you also would have to finance with Ford Financial. It is also usually a specific number of months, Like 36 months for example. It is important to understand that it is not “free money.”

Changing your mind to look at things differently is not easy. Insurance and Finance companies are trained to trick your mind into thinking you are getting a discount for paying for something in full. In reality, that is the actual sales price, and you are paying finance and interest fees if you pay overtime.

PROBLEM 3: LIQUIDITY

Being a business owner, I realize that cash flow is the key to the success of my company. I do not want to tie up large sums of money that I cannot access. Owning a backyard patio business for year, I would much rather build 1 small pergola per day and make $500 per job then build a giant covered patio and make $10,000 in a month. It is the same amount of profit in each case however what if the large job falls through? What if the weather pushes the crew back a couple of weeks? What if the client cannot pay at the end of the job? All of these factors can completely destroy the cash flow of the business. The first scenario has less risk but consistent cash flow. It is a lot easier as an owner to make long term decisions knowing there is daily cash flow. Walmart doesn’t just open on Saturdays!

In problem 2, the client was willing to give up his cash for what he thought was lower risk. Remember the safe place we talked about to place our money? Over time he gave away over a million dollars. If I owned a restaurant and I had a large expense, such as a piece of kitchen equipment fail on me, I would have access to cash to buy a new piece of equipment without interrupting the cash flow of my business. If I had placed this capital in a government sponsored qualified plan, I probably would not have access to the funds without interest or penalties. Liquidity is buying power.

PROBLEM 4: GOOD INVESTMENT

Now that we know we need a safe and liquid place to park our capital, what are other features that we are looking for?

Good returns
Guarantees
Flexibility
Creditor Protection
Works in high and low interest rate conditions
Stock market proof: No volatility
Outside of government sponsored programs

These may be a few of the qualities someone would look for in a safe place to put capital.

There is a big difference between investments and somewhere safe to place capital. Invests involve risk. They involve a product such as a stock or a real estate. An investment can be a commodity such as gold or even baseball cards. They involve buying something and holding it for a period of time, and then selling it or generating income from it. There is a time and place for all these things, however that is not what we are talking about. Investments typically mean tying up capital. Usually in a place where there is no liquidity. There is usually some risk involved.

We want a place to put capital to get a safe rate of return that we can access without asking for permission.

PROBLEM 4: EARMARKING CAPITAL

The most common mistake that most business owners make is “earmarking” their capital. What that means is they set money aside for a specific purpose. For example, a business owner may have a savings account specifically for a piece of equipment that they may need in the future. While this may seem like a good business practice, it is most likely costing you money over time.

Example:

Option #1: A business owner is saving $5,000 a year for 5 years for a total of $25,000 to purchase a piece of equipment. The same business owner has earmarked another bucket of money to buy and sell merchandise. The merchandise cost $5,000 also, and every time it is sold there is a profit of 25% per year. Each year the owner turns this inventory. The business owner will need a total of $10,000 to get this plan started. $5,000 for the equipment and $5,000 for the inventory. At the end of the plan the business owner will have $25,000 plus the $5,000 they used to buy and sell with, plus the 25% profit on buying and selling they product. That part would grow to $15,258, giving us a grand total of $40,258.

Option 2: What if during those 5 years, a business owner could use that saved $5,000 that was earmarked for equipment but buy and sell merchandise for a 25% profit? In addition, we get to add the $5000 that we use for inventory. Just like the 1st option, we start with a total of $10,000. Now every time we turn our inventory at 25% just as example 1, however we get to start with a larger number working for us. The total after 5 years is $53,342. We now can then take our $25,000 out and pay for the piece of equipment we had been saving for. What has happened is that when we earmark our money, we restrict its ability to make more money. Option 2 we are able to make an extra $13,000, and we are still able to buy the equipment that we have been wanting.

This works with insurance and finance as well. We have finance charge in almost everything we do. Property and Casualty insurance has some of the highest finance charges in the industry, and it seems to be just accepted. I have seen as high as 22% on some of the finance charges for a business owner when the premium finance. It is very common to see 10 to 12%. This is pandemic for one as a business owner to understand that these interests are the most common reasons that business owners fail.

It is not because you had a bad idea, or bad business model. It is because you had a bad execution of your finances.

In 2021, we watched as restaurants closed their doors to never reopen. The covid pandemic stopped the flow of traffic to a lot of these restaurants, and they had to adapt. Some restaurants switched to a take-out menu or used uber eats. Others dumbed down their menu and shortened their staff to lower costs. Alot of business owners we able to use PPP loans to help pay for wages and salaries. Some landlords gave businesses a break during covid because they did not want empty buildings when the pandemic was over. The one expense that a business owner did not receive help with was their insurance premiums. Insurance companies we not calling clients and saying to them not to worry about their premiums this year. As a matter of fact, most business owners had to add food delivery coverages to their plans. The pandemic for business owners has been going on for over 100 years, and it is right under their noses. It is hiding in plain sight, with the highest finance charges in any industry.

PROBLEM 4: CUTTING COVERAGES

to be continued…

by Brent White

December 14, 2022

I recently had the pleasure of watching a financial advisor take the savings a business owner has from the property & casualty premiums and put the money into a 529 college savings plan for the kids. When I say pleasure, it literally made my skin crawl. A 529 plan represents everything a business owner should not do, and I can give you 529 reasons why.

I am not going to waste time listing all 529 reason why this is not a good idea. You can do a google search and the internet is full of the reasons. I will stick to the main principle.

It’s called……… “CASH FLOOOOOOW!” Not only is the money ear marked specifically for college expenses, if the market does not perform then the fund can be detrimental to the whole plan! Imaging having saved 100k right before the year 2008. The market drops 75% and now you plan only has 25k in it. Not a lot of help for college. In the meantime, your business is financing the insurance plans at 15%. What if the same dollar could be used to save this 15% and provide cash for flexible spending at the time the child reach college age. Maybe they are on a scholarship and need a car not tuition. Maybe the parent dies prematurely, and the savings stops completely. These are all consideration a business owner has to make before locking their CASH in a plan with limited to no flexibility.

The solution: Dividend paying Whole life insurance. There, I said it! Let’s say for example you are putting $10,000 a year into a 529 and you are getting a 6% return. In ten years, there would be $149,716 in the plan. Sounds like a great deal. Structured correctly, a whole life policy would have almost the same amount of cash, plus a death benefit. You also have flexibility to spend the money however one might see fit, and not what the government allows. But wait, there is more. If the owner of the policy gets disabled, the policy could continue making the payments. So, it has a disability feature as well. But wait, there is more. The owner of the policy can use the cash value to pay for property & casualty insurance premiums each year to reduce finance charges. I have seen these as high as 22%! So, if I could save $2200 on a $10,000 business insurance premium per year and redirect that money back into my policy, that would create another $22,000 plus the interest gains on those dollars. But wait there is more. The $10,000 I used for paying the business insurance never actually left the policy. It continued to grow at the same rate with what is called uninterrupted compounding. I would have my $149,000 plus $22,000 plus the interest on the $22,000.

But wait, there is more. What if when the child reaches college age, and I was able to take out a student loan. Student loans grow tax free while the child is in college. The account would grow to almost $200,000 plus the $2,200 a year for the business savings. This would give us roughly $210,000. We can then pay off the student loan and continue to see the growth of the cash value of the amount that was in the policy. The money never actually leaves the policy. In 18 years, that would grow to $529,000. <——- That is a better 529 plan.

These are hypothetical numbers. Real numbers may vary. I hope you get the concept of double duty dollars. Making $1 do multiple things.

Things we get with Life Insurance:

Tax deferred growth
Tax free with drawls through policy loans
Asset protection
Death Benefit
Disability waiver of premium
Free from government control
Flexibility to use however one sees fit
Options
Save returns on cash
Accessibility

The list goes on and on.

If you want to understand more, there is a lot to learn. Start by watching this video of the story of Nelson Nash. The book he has written has changed the way we look at money. The microplanning of 529 plans is pandemic. Leaning how to create an economy of money outside of government control is the difference in a child maybe not even having the money to go to college. Take some time to learn the concept. Here is a link to the video: This is Nelson Nash – The Official Site for the Infinite Banking Concept – R. Nelson Nash.

When you are ready to read the book, let me know. I would love to go through it with you.

-Brent White

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