Dick weber Dick weber
Podcast 246

246: Incorporating Life Insurance Into Your Financial Plan With Dick Weber

Today, I’m talking to Dick (Richard) Weber. Dick is the founder of The Ethical Edge, a fee-for-service consultancy with a unique focus on life insurance. His company provides clients with a wide array of services, including life insurance policy management with both a technical and due diligence perspective on legal cases pertaining to life insurance.

Before launching his own company, Dick spent 25 years in life insurance sales. He has won the Kenneth Black, Jr. Leadership Award from the Society of Financial Service Professionals, was elected to the NAEPC Estate Planning Hall of Fame, and created several computer-based tools that have revolutionized how advisors and their clients view and select life insurance products.

In our conversation, Dick and I discuss his book, Thriving Beyond Midlife. We’ll also dive into several critical aspects of retirement that have very little to do with finance, and how the life insurance industry has changed over the last 50 years.

In this podcast interview, you’ll learn:
  • The difference between a life insurance salesman and a financial advisor.
  • Why ethical selling has become such an important issue over the last several decades–and why so many people get stuck with mismatched insurance policies.
  • Dick’s unique, client-driven approach to life insurance and retirement planning.
  • What defines a pro in the life insurance industry–and how to find one.
  • How DIYers can work with a financial advisor to make better decisions (and better understand what they’re doing).
Inspiring Quote
  • "“I like developing portfolios of policies just like people have portfolios for growing wealth. There's synergy in different kinds of things that, when brought together, work better together than any one of the single parts.”" - Dick Weber
  • "“It's not invest in life insurance because it's a better yield. It's when you need life insurance for long-term purposes.”" - Dick Weber
Interview Resources
Disclosure
Offer valid in the 50 United States and the District of Columbia, to first-time requestors. During the offer period, receive one (1) in-stock book per request. Limit (1) book per week per household. Limit three (3) books total each calendar year, between January 1 and December 31. Offer valid while supplies last. Howard Bailey Financial, Inc. reserves the right to cancel, terminate or modify this offer at any time. Void where restricted or otherwise prohibited.
Read the Transcript

[INTERVIEW]

Casey Weade: Dick, welcome to the podcast.

Richard Weber: Thank you and good morning.

Casey Weade: Well, Dick, I'm excited to have you here because you have such a wide range of experience and real-life experience at that. One, I want to hit on life insurance and talk about your life's work that had a lot to do with life insurance. However, I was really torn when I was preparing notes for today because you have such a wealth of insight into the non-financial aspects of retirement as well. I want to talk about your book, Thriving Beyond Midlife. But first, I think it would help get a little better background information on you for the listener if we talked about life insurance. And I want to kick this off...

Richard Weber: Everyone's favorite topic, of course.

Casey Weade: Everybody is excited about life insurance. Maybe it's just us but I don't think we're the only ones. I don't think we're the only ones. It's an exciting topic and it's really an amazing tool. And you offer a lot of insight into the uses but I loved it in your bio. I thought this was so unique. You said that you spent 25 years as a successful life insurance salesman. I mean, here's the epitome of why people don't like life insurance, "Oh, he's just trying to sell me life insurance." And you were a self-described salesman for 25 years but you've made a transition over your lifetime. What do you see as the difference? There's life insurance salesman and it's easy to confuse a salesman with an advisor, a salesman with a planner. How do you discern between a life insurance salesman and a financial advisor? Are they one and the same? Can you compare and contrast the two?

Richard Weber: Good question. And I think the real difference from the client standpoint, from a customer's standpoint, is how they feel they're being treated in the transaction. There's expertise and then do I feel like this advisor is working with me to help me self-discover the things that are in my best interest? Or is he or she just trying to sell me what's ever on the shelf this week? And I think all too often and I don't think it's intentional, but often it just feels like I'm being sold. And so, in the last, I would say 20 years of what I've been doing, now I'm in my 54th year in the industry, only my 52nd year in our marriage, our focus is on what is that client's experience? How can we get them comfortable to the point of one of my colleagues puts it perfectly that if I can be an expert facilitator of decision making, not an insurance salesman, not a financial advisor, an expert facilitator of decision making, helping you make decisions that are smart for you, then I'm doing the right job regardless of what my particular expertise might be in that financial realm?

Casey Weade: Expert facilitator of decision making, I like that. I like that. I love that. I wonder if you view this as one of the biggest shifts in the industry. I know I do. And my dad, he was insurance only when I was a kid. And so, he had an insurance-only practice and that's really the solution, right? In life insurance, annuities, long-term care is mainly insurance-based. And he evolved from there to financial planning and a securities license and started putting together comprehensive financial plans. He would often say when someone would push back and say, "I don't like life insurance. I don't like annuities," he would go back and say, "Well, part of that is the history of life insurance or annuities is that, originally, it was mostly just salespeople that are out there and this is what they sell. They sell life insurance, they sell annuities. But now, as a financial planner, there are real uses for these tools. Do you see that as a shift in the industry where it used to be, you've got life insurance people selling life insurance, and now you've got financial planners that are adopting it and incorporating it into the financial plan? Is this one of the biggest shifts over the last 50 years?

Richard Weber: I think there has been. And what's always been fascinating to me is that what we today call financial planning really came out of those classic life insurance agents. You're too young probably to at least have watched this TV series in its original form, the late 50s, early 60s, Father Knows Best. Father, when they were forming the script and the concept of the show, Robert Young, the actor, had an insurance agent, Frank Nathan with New York Life and they were all talking about what should father's occupation be that would leave him around the house in the afternoon? And they came up with the idea father was a life insurance agent. And I think that was the high watermark for us in the United States of the appreciation for the value of that ideally trusted advisor who's not just selling stuff, but he's there to help us make decisions that are in our best interest for things that it's much more fun to go buy a flat-screen TV at Best Buy than it is to buy life insurance. And that's totally understandable. A good life insurance agent's responsibility is to help widen the discussion about why do I own life insurance? Well, it's to take care of my wife, my kids, my grandkids, frankly, even our colleges. We've just decided to make a small legacy to our colleges. So, that's the value of insurance. And the question is, how can that be delivered? Is it by the pure agent? There still are some and I'm one of those. I'm an accredited estate planner but I don't do estate planning. I focus on my insurance expertise. People like your father are in the main. Folks who were very good at what they did began to recognize that there were more things that their clients wanted that relationship and wanted that knowledge base to be available to them. And so, there has been a natural evolution. I would say my guess is maybe 60% of the classic insurance agents have evolved into a broader practice. But at least among my peers, I think there still is a core group of people who would say, "What do I do for a living? I'm a professional life insurance agent."

Casey Weade: Yeah. It's a quick way to end a discussion on an airplane. So, I learned that early on.

Richard Weber: It is and I had to train myself. You mentioned earlier that fear of what are people's reactions going to be? And very early in the industry, my wife and I were invited to a social gathering and you know the conversation is going to be, "What do you do for a living?" And I girded myself. I mean, I sweated for a half hour. Am I going to say I sell life insurance? I finally decided to do it. It was probably the most nervous thing that I had done up to that point other than asking my wife to marry me. So, I was asked the question. I very forthrightly say, "I sell life insurance." And the person who asked the question came back with that worst possible anticipated dumb response, "You didn't come here to sell us life insurance, did you?" Now, that should have put me down for at least 10 years but I quickly recognized that was their problem, not mine. And I really focused on it was really important if someone asked me what I did or in talking to a new prospective client, what did I do? "I sell life insurance. I'm an insurance agent. I always wanted to be as clear about that as possible. And if that was going to be a problem, we could discuss it but I wanted to get it out there."

Casey Weade: Yeah. I think that's important. Financial planners have the same thing. It seems like this is a business where in almost any town in America of any size, you can throw a rock and hit a financial planner. There's a lot of us out there.

Richard Weber: Or a bank or a realty office. I mean, those three.

Casey Weade: Right. And I think it's important for us to get to the point where we talk about differentiation because I think that's a real struggle for individuals and figuring out, "Is this the right person that's going to not just place life insurance, but really be the right financial planner?" I want to get to that. But first, I want to stay on this topic of some of the biggest shifts in the industry over, let's say, 30, 40 years, and that brings me to ethics. You're a columnist for Life Insurance Selling with agent-focused ethical selling as a focus through the 90s. And I wonder how this has evolved but what made ethical selling a particularly important issue during that time frame and has it become less of an issue over the last 30 years?

Richard Weber: It certainly has not become less. What happened coming into the 90s was that a breakthrough type of life insurance was introduced in the late 70s and really got going from a selling standpoint and a buying standpoint in the mid-80s. And it was called universal life or current assumption universal life. And what made it different was that none of the pricing elements were fixed. So, if you were going to buy a policy and your focus was understandably, "I don't want to pay any more than I have to, or at least I haven't found anyone who wanted to pay more than they had to for their life insurance." And so, if that were the focus, an agent could run an illustration at an assumed rate of return, which in the early 80s could have been 12%, even 14%. By the end of the 80s was 8%, could run an illustration and use that percentage as the calculator for how much do I need to pay. Not remembering and the customer not knowing that 14% or that 8% is just momentary, that percentage rate can come down for that type of policy as low as 4%. And they did. Well, an amount of money you put in at 14% is much lower than the amount of money you need to put in if your crediting rate is 4%. And that kind of got lost in the enthusiasm about this kind of policy, whose main selling feature was, "Pay what you want whenever you want," and that quickly transformed to, "Pay as little as you can as infrequently as you can."

So, that by the late 80s, early 90s, these policies actually were very troublesome for many people and these policies were starting to run out of cash value because there wasn't enough premium and there wasn't enough crediting rate going into the policy. And that caused a number of class action lawsuits. So, what I did was twofold. There happened to be a need at the American College, which is the main educational institution for the financial planning industry. They were between ethics professors and they asked me to be an interim adjunct professor of that at the same time as Life Insurance Selling said, "We're interested in a series of information that is primarily for agents that will help them better understand these new products and the old products and the context of that and how to do right by the client." And that was for that point in time, that really was my main objective, both in my teaching and in my writing. So, it was that very interesting product that hardly anybody understood that was being not intentionally misused, but it was being misused because it was the chase to the bottom of what's the least I can pay for my insurance, and that wasn't the right way to do it. And that's what we were trying to help people understand.

Casey Weade: Well, and I want to talk about how that's changed so I hate to get in the weeds. However, this is an important topic too, universal life, because that was one of my first jobs in this financial industry was taking over an orphan book of policies in Hillsdale, Michigan. Nobody else wanted to drive up there and I said, "I'll do it." So, I took over this book of business. Somebody passed away and this agent mainly conducted all of this business through the 80s and 90s. So, it's all universal life. The policies were structured improperly. They're not going to survive. It was a bad deal. And then I still own some. I own one on mom. I own a current assumption UL on my mom. There's one on my grandfather and I was in the business of replacing a lot of those and putting the client in a better position for a long period of time. And now, I still meet with individuals who have a bad taste in their mouth from life insurance saying, "No, I don't want to talk life insurance." I don't want to talk life insurance because they went through the universal life and not just life insurance, specifically universal life insurance, but now there's a lot. I own GULs. I own IULs. There are so many different types of universal life and I do believe regulations have changed dramatically over the last 30 plus years to make it more difficult to ensure that things like that don't happen or reduce the risk of those things happening. Can you just speak to maybe universal life insurance? How that's changed? Is it good? Is it bad? Go ahead.

Richard Weber: Our thought process is there are no bad policies. What can be bad is a mismatch between the client's own personal style of how they think about and invest their money and when it comes to insurance, the kinds of policies they bought. So, someone who would be a self-assessed, "I'm conservative with my investment. I'm more concerned about a return of my money than a return on my money," that's not the kind of client we should be talking about investment-based life insurance where what drives the value of the policy, the cash value of the policy, is the market either directly or indirectly, variable or indexed universal life. On the other hand, someone who is typically young typically has the ability and the wherewithal to be aggressive with their money. We would think that then the only kind of policy they want to talk about is an investment-related policy. Every now and then you get someone who is very aggressive in their business and in their accumulation of wealth, who, when it comes to buying insurance, will actually buy a whole life policy because they want some balance. They want something that teeter-totter of making sure there's something there if the market goes crazy or the risk they're taking sour. So, you can get both kinds of approaches. My role is to simply help the client self-discover. And we've got a number of tools that we've used to help the client realize they may have a particular asset allocation. I'm sure you're saving money for the future.

Retire in the style to which you'd like to become accustomed is how I put it and you have a certain asset allocation because you have a certain risk tolerance that you've discussed with your financial planner, and that risk tolerance is what drives how you invest currently in the market. That same risk tolerance may or may not be appropriate for life insurance because it's life insurance. I think we all recognize that to the extent that if we do buy insurance to protect our families against premature death or premature disability or for the resolution of taxes or equalizing legacies or taking care of children who may need extra care if you're not there financially to provide that care. Those are all the reasons people might buy life insurance. Now, the issue is what type of policies, and frankly, my approach is what type of policies. I like developing portfolios of policies just like people have portfolios for growing wealth. There's synergy in different kinds of things that, when brought together, work better together than any one of the single parts. So, I think that's really the difference. It's not about any particular kind of policy. It's about helping you self-discover risk tolerance and then risk tolerance as it applies to, in my terms, developing a portfolio of policies that make sense for your objective.

Casey Weade: Yeah. I like that. I love that, a portfolio of policies, because if I look at what I've done, I've done the same thing. I have my term insurance, then I have my IULs, and then I have my GULs and SUL. They each have a different purpose and their planning process is about finding the closest distance between two points is a straight line. So, figure out exactly what you wanted to do and pick the policy that's designed specifically to accomplish that goal, not three or four different things simultaneously. One more piece that I wanted to mention. You spend a considerable amount of time as an expert witness. And I was curious, though, what do you see as an expert witness is have regulations reduce the risk to the client, or are risks to clients buying life insurance lower today than they were in the 90s? Or have they just changed?

Richard Weber: Unfortunately, I would say that the kinds of rules that are just starting to emerge today have been very slow to be adopted. There were more rules invoked in the early teens for annuities. So, there actually are stronger rules for annuities here in California than there are for life insurance. So, it's been very slow coming. What we've seen is the state of New York recently created a series of rules that were not merely strong but the strongest that had ever existed in terms of indicating to the insurance agent that they must pursue a process that first puts their client's interests above their own, and that's an attitude and that the insurance that they proposed, and that's all kinds of insurance so it's life insurance, it's annuities, it's even term insurance. It has to be suitable. What's suitable? Well, suitable is that I have gathered from you a certain amount of information. We've certainly had some conversations so that I can reasonably say, "I understand, Casey. I understand what his current circumstances are, understand where he's going long-term. I understand his resources. I understand his risk tolerance." And as a result, I'm going to show him two or three different kinds of products, two or three portfolios. One might be oriented to how do we manage our current cost as low as possible where the other may be you don't really have a cost problem. You want to know that it's going to grow in a certain safe way.

So, there are these different segments that I can show you and help you answer your questions. But what about this? What about that? So, that you can say, "Okay. I get it. This is the one. What's behind door number three? That's the one that makes sense." Or every now and then I get what I call the Build-A-Bear. I like what I see here, but can we customize each of those three doors and make one a little bit more specific? And that's my Build-A-Bear and that's my favorite because then I know the client's really gotten it. That has been very slow to evolve. And in fact, the appellate court of the Supreme Court of New York has recently set aside New York's rule. The New York superintendent in financial services is challenging it. The rule will probably come back. CFPs, financial planners who are certified financial planners with a CFP Board of Standards, they have a new fiduciary rule that for them brings all of that in. What we're trying to do is make this available to agents and to customers, a process that they can say, "Hey, here's how I want you to do it. Either the agent direct it or the client direct it. Here's how I want you to guide me through the process. I want to take care of my family." Of course, that's important. So, two statements. "I hate life insurance. I want to make sure that if I did die prematurely, my family is going to survive, not just in terms of mortgage, not just in terms of food."

This really gets into Thriving Beyond Midlife. It's important that we attend to all the things of living, children's allowances, vacations and, of course, provisions for kids going to college and the like. So, all of that needs to be thought about how do we do that and I hate life insurance. How do we bring those two together? We bring them together by paying attention to the client and letting the client drive the process.

Casey Weade: It all seems so common sense, Dick, that this all seems common sense. You put the client's interests first and you don't just look at one solution. You look at all the solutions. It's part of a broader plan. You need to know the client intimately. I think it's newer to the client and sometimes they're going in saying, "Hey, I want to buy a life insurance policy. Why are you asking me all these questions?" Yeah. Well, this is how we follow the best interest standard. And you said interest above their own. That seems like it should be common sense. You have authored a lot of books. You've co-authored a lot of books. One of those is The Ethical Edge: How to Compete with Your Integrity Intact (and still get the sale). I know I look at that and I go, "Well, that makes it sound like it's difficult to succeed in the life insurance industry if you have a high level of integrity." What do you have to say about that?

Richard Weber: I think that that is the fear that if I take the time to do what I was just describing in terms of paying attention to the client, among other things, it's going to make it a longer process, which means I can't see as many people, which means I can't sell as many policies. I understand that as a fear. And we're actually trying to elevate the attention to life insurance as being a type of financial planning process. It's not one and done. I think the insurance industry has demeaned the real process behind the decisions about life insurance. It's something that's important. Let's take the time to figure that out just as let's take the time to figure out where you're going long term and the asset you want to develop so you can retire in the style to which you'd like to become accustomed. Those are equal things and they take time to develop. So, let's get away from, "Hi. I'm Dick Weber. I've got a bunch of term insurance policies on the shelf and I'd love to sell you one. Would you be interested?" That's not really how insurance should be sold. It should be sold as any other or I should say addressed ultimately implemented. We can use the word sold as any other financial planning tool.

Casey Weade: Well, I think it's a good transition to another one of your books, Life Insurance as an Asset Class - A Value-added Component of an Asset Allocation. How does life insurance fit into an asset allocation? What do you mean life insurance as an asset class specifically?

Richard Weber: Thank you. So, I think just to distinguish, this is when talking to someone who is already owning or is contemplating owning a life insurance policy they need for their lifetime. Now, none of us know how long that lifetime is going to be but let's assume it's 30 or 40 or 50 years in the future. But for whatever their circumstances are, they're concerned about estate taxes, they're concerned about balancing legacies. I've got a family business. My daughter's going to get the business. What do I do about my son? I've got a special needs child. All of those things give rise to the need, not just for temporary insurance, but for insurance that will last as long as I do, plus 45 days. For that kind of insurance to think of it as an asset class is a significant transition in thinking. But so, you've got these classic asset classes. You've got that conservative. You've got balanced. You've got aggressive. You've got very aggressive. You probably have assets across that spectrum because it makes sense to keep balance in an investment portfolio. The Life Insurance as an Asset Class says that when you consider whether it's a whole life policy or an index universal life policy, it really doesn't make a difference that reserve, that cash value in that policy because it's readily accessible to you. And after a reasonable period of time where the policy has become seasoned, that's an asset. When you apply for a mortgage, one of the lines on the application with the bank is the amount of death benefit life insurance you have and most importantly, the cash value of that policy. Your bank considers it an asset and you should, too. All we're doing is putting a label on it.

So, the cash in a cash value policy is a conservative asset and what we were able to do from a numbers standpoint is historically look at certainly there's the stock market, but we're not talking about life insurance versus stocks. We're talking about life insurance versus other fixed return investments. And because of the tax advantages that had been given life insurance, both in terms of the growth of cash value and the ultimate tax-free nature of the death benefit itself, that life insurance actually has a somewhat higher internal rate of return. I pay a premium. I developed some cash value. Over a reasonable period of time, that after-tax equivalent return is somewhat more favorable than bonds or other fixed return assets you should have. So, it's not life insurance versus the stock market. It's if I'm going to buy life insurance, one interesting concept is maybe it would be better to allocate pools of money from my portfolio, moving them from bonds into the cash value portion of life insurance rather than paying for it out of my wallet. Most of us don't want to pay for insurance out of our wallets. The alternative is simply shift some assets around and make life insurance part of the bigger portfolio. I'm always struggling on how to say that to keep people their eyes glazing over. I don't want that to happen. But that would be...

Casey Weade: My eyes are not glazed over, Dick.

Richard Weber: Good, good. So, does that make sense to you that we're making long-term life insurance with cash value? We're considering it as part of your portfolio or contextualizing it in your portfolio. We're not pitting it against stocks. We're comparing it against comparable asset classes. That's what life insurance as an asset class is all about.

Casey Weade: Sure. And in that regard, does life insurance hold more value, specifically, cash value life insurance hold more value today than maybe in years past due to low-interest rates and uncertain tax policy risks?

Richard Weber: The good news is that if you had purchased a universal life policy up through certainly the late 90s, you would have had a guaranteed 4% floor that the insurance company agrees that they would never pay you less than 4%. That's the good news. The bad news is that interest rates have come down so far. Basically, the short-term interest rate today is effectively zero so that insurance companies with respect to the kinds of policies where they're investing the assets and then they're crediting, in this case, a guaranteed 4%, some companies don't have the 4% credit. So, there, a lot of companies have started increasing the charges that the policies allow them to increase even for an existing policy. So, it's a question that has a complex answer. The good news is 4% minimum crediting rate. That sounds really good today, but the carrier can increase the charges side of the policy so that has to be looked at in balance. In the long term, life insurance cash values still represent a somewhat better net yield than comparable bonds because bonds had come way down. The long-term bond is less than 1.3%. The 10-year bond yields less than 1.3%. Back in 1980, at the peak of that inflationary period, the 30-year bond was over 20%, the 10-year bond was about 15% but there was also tremendous inflation. So, it gets to be a really complicated arena, which is why you want whether it's a pure insurance agent who knows their stuff or a financial planner who really knows their stuff, is paying attention to you, and is taking into consideration your suitability factors. They're equipped to answer these kinds of questions. You've asked really good questions. They don't have simple answers. Let's talk about what it means to you.

Casey Weade: Yeah. Well, I think our listener understands the importance of financial efficiency, and I think even more so today than they have in years past where they go, "I really need to maximize the efficiency of all of my assets that I have out there in order to maximize returns or maximize income." Whatever the specific goal is, we have to find the best tool for the job. And what you're talking about is, well, let's maximize the efficiency of the portfolio as a whole. Your asset allocation may be composed of stocks and bonds, but could we replace those bonds with some cash value life insurance and increase the return of the overall asset allocation while we also take care of securing a death benefit for your payors?

Richard Weber: Exactly. It's not invest in life insurance because it's a better yield. It's when you need life insurance for long-term purposes. Now, we can contextualize it within your portfolio so you're exactly right.

Casey Weade: We have a question from Doug. Doug says he's a Weekend Reading subscriber. If you'd like to submit questions prior to our interview, make sure you go to RetireWithPurpose.com. Sign up for Weekend Reading, just like Doug, and you'll have the opportunity to submit your questions early. Doug says this. He said, "So much of what I hear and read is that having some whole life insurance that has a cash value provides additional flexibility and options entering and in retirement. When is it too late to start to have a policy like that as part of a retirement plan or as you might have stated, an asset allocation?"

Richard Weber: Sure. The ideal is that if you have the resources, that's another one of those critical conditions if you have a long-term need, if you have the resources, the sooner you get started with that unique type of life insurance policy called whole life, the sooner you start with it, the better. I would say we've got clients who have purchased whole life insurance even in their 60s. The problem is because whole life insurance has the feature of a fixed and guaranteed premium rather than one that is calculated and can go all over the map, as with universal life, is it simply gets more expensive if you're buying it at age 60 than if you're buying it at age 35. And the ideal whole life insurance policy that is really going to come into its own as part of your portfolio ideally needs at least 10 and better 20 years to kind of sit in the pot and simmer and come into its own. So, if you were able to, if you had the resources, whether it's from other assets moving them over or if it's out of your wallet, buying a whole life insurance in your 30s puts it in a great position so that when you retire, whether it's in your 50s or 60s or now even your 70s are the new 60s, then that whole life is in a perfect position to it's optimized to do its thing. Kid, don't buy it until you're 65. There may be reasons that some people do that, but the initial price is so much higher, it makes it more difficult to make it work the way we would ideally make it work. So, to Doug, I would say if you've got the long-term need, if you've got the resources, start buying some whole life insurance and there are some great companies out there from whom to buy them. I'm not a pitchman for any insurance company. We are completely agnostic, but there are some great companies out there. Even more important, find yourself a great agent.

Casey Weade: Well, that's what people want to do. They want to find a good advisor that's going to incorporate this into a broader-based financial plan. They want someone that's going to shop around. Let's circle back to kind of where we started. You have another book out there revealing life insurance secrets, how the pros pick, design, and evaluate their own policies. I thought that was a neat slant.

Richard Weber: You've done your homework.

Casey Weade: How do you define a pro in the life insurance industry? And basically, how does someone find that pro?

Richard Weber: Two great questions. I think the pro, by my definition, is one who has that client's interest above my own. That's a very professional kind of criteria. Of course, I'm in business to help people do the things they want to do. I earn commissions when I do the right thing in the right way. That's how I support my family. That's a very reasonable interest. It's not that I have no interest, but I'm putting your interests above my own. I'm not coming to you with an expectation, "Gee, Casey looks like an index universal life kind of guy so I think that's what we'll focus on. Doug looks like a whole life kind of guy, so we'll focus on that." Absolutely not. I've got to come in as much as possible as a blank slate. I have to discover and then with what I've discovered help you discover what policy or policies make sense for you. So, that's the pro. That's what is the pro who has that intention to put the client's interests above their own and who has the skills and the availability of different kinds of policies so that they can demonstrate to the client what the different possibilities are and help them self-discover. In terms of how do you find them, that gets really interesting. And my recommendation has been whether it's pure financial planning or pure life insurance agent. Interview a few. Don't let the razzle-dazzle woo you in too early.

So, if I'm looking for an insurance agent, I'm probably going to talk to a couple of people whose financial ability I admire or have high regard for. I'll ask them who they work with. I will talk to them. I'll ask them about their attitudes, not asking them about their policies. I'm asking about how they go about doing what they do. And I'll use what I hear to help me hone in on the person I'll deal with. That first or second actual meeting with the supposedly chosen agent will be really important. How do I feel in this engagement? Notwithstanding everything they might have said on the phone, are they just trying to sell me something or are they really pursuing the process? Are they walking the walk rather than just talking the walk? One thing I would say, you said something and everyone says it, I want an agent who, among other things, is going to shop and get me the best deal. That's probably the biggest fiction in the life insurance world because a life insurance policy, whether it is a term insurance policy or a whole life policy, that huge range in terms of cost, from an insurance company standpoint, they won't know what it cost them to have placed that policy until the day after the death, and none of us know when we're going to die. So, a whole life insurance policy may have the perception, gee, this one is $300 cheaper than that one. So, the cheaper one may be the better policy. Well, it's very hard to determine that because the dividend structure, the long-term guaranteed structure in reality among the big four.

So, I will name names, but it's not saying who's better than the other. Northwestern Mutual, New York Life, Guardian Life, MassMutual, any one of them will be a superb carrier if it's the right kind of policy that you're out to buy. But it's not that one is selling a better deal than the other. They all serve the same large community of millions of people and this is a law of large numbers industry. The cost to the insurance company, assuming they have similar distribution systems and similar policies, is ultimately going to be the same. So, it's less about who's got the cheaper premium. It's more complex than that. Find the right agent and shopping. I understand the inspiration is what we do when we go for flat-screen TVs. You know, we go into Best Buy, we find the three of the 55 inches, and if they all seem to have the same quality of image, then we're going to buy the cheapest one. I get that. Life insurance is far more complex. So, don't be sucked into just the cheapest one. The one exception is if you're buying a 10-year term and if you have three policies, all of which have the same favorable conversion features and one is a little less expensive, you might move in that direction. But even with term, the differences can be significant between term policy and the cheaper term policies may not have the better conversion features if that ever becomes an issue. I didn't mean to go on and on but speaking to the complexity of even the simple things, which is why having that agent that you really can trust to put your interest above theirs and to give you the opportunity to self-discover, that's why that's so important.

Casey Weade: And, Dick, it seems that you want an agent that's going to be looking at the big picture as part of where does this fit inside this comprehensive financial plan that we're structuring? That's kind of what I hear. And you've seen some of these ads. You've heard the talking heads before but there are some firms that hate life insurance and really talk badly about it on a regular basis. And quite often you'll find that's in the fee-only field that they're just saying, "Hey, life insurance is just we're not going to use life insurance. Life insurance is bad or annuities are bad," or whatever it is. Do you think that you can do true financial planning without those tools in your toolbox? Not that they need to be used in every plan, but you need to have them in your toolbox. If you believe that, how do we know as a consumer who has the right tools?

Richard Weber: That's a great question, and that's what we've in the last couple of years been trying to address. You're absolutely right. And I think that there are a complex series of reasons why many financial planners do not either specialize or even talk favorably about life insurance, about annuities, about disability insurance, about long-term care. When we talk to them one-on-one, what we've discovered is often it's because they don't know as much as they would want to know to be able to come out to their clients and say, "This is something we need to talk about." So, I think it is not so much a bias against but an uncertainty about how to deal with it, which is why our little firm has created a certification as an insurance fiduciary. So, I'm insurance fiduciary number one. I trademarked that concept a number of years ago and we've just trademarked the certification program and we've just brought the first six individuals through a 10-week curriculum of instruction, of homework, of one-on-one interaction. We had our graduation ceremony. We played the graduation music, all of course on Zoom, to have fun. What we're trying to do is help financial planners better understand the role is not expertise about insurance. It's about being a guide and a supporter of their client to be making decisions around personal risk in addition to investment risk, they're different things, and then at the right time bring in a previously vetted insurance professional.

Whether that's a life insurance professional or a property and casualty professional, bring them in to work with us together. I, as the financial planner, is still working with my client. We're still sitting on the same side of the conference room table. I'm supporting her making the decision she needs to make. She's going to lean over and say, "Is that right? Can I trust that?" And I can say, "We're good. You're getting good information." I'm not the expert. I've learned how to be in support and in guidance of her decision-making. And that's the thing that we've created. That doesn't undermine the life insurance agent. We're not turning the financial planner into an insurance salesman. We still want the professional insurance person to do that. But we're giving up the responsibilities a little bit and we're giving the client that support and guidance that they desperately need. Who do I trust? Trust the financial planner that's been through this kind of program.

Casey Weade: You know, I think after a conversation like this, it's easy for someone to get the proverbial cart ahead of the horse, if you will. Now, they want to get out and take action on this life insurance piece, term insurance, whole life, whatever it might be. They want to take action. How would you help someone prioritize where life insurance should show up in a financial planning process? If someone is undergoing a financial planning framework or financial planning process, at what point during that process do you believe they have the life insurance conversation? Is there a list of priorities?

Richard Weber: And are you speaking from the customer, the client standpoint, or from the advisor's standpoint?

Casey Weade: Yes.

Richard Weber: So, I think that...

Casey Weade: So, you're working with a do-it-yourselfer, right? They're thinking about buying life insurance.

Richard Weber: Oh, they're my favorite people.

Casey Weade: Yeah.

Richard Weber: The do-it-yourselfer I describe as he or she is at Home Depot at 5:55 on Saturday morning, waiting for the doors to open to stock up on all the supplies for their do-it-yourself projects for the weekend. They are not the ideal client of the financial planner or the professional insurance agent. They're hard-wired to do it themselves and to go online and buy a bunch of term insurance or whatever it is. And I think that's fine. If they want to come to someone like me and I'm unusual, I charge by the hour. We do not sell insurance and we get a lot of inquiries. A lot of them from do-it-yourselfers that way of working is okay with them, "Not going to buy insurance. I'm willing to rent you for an hour or two just to get some good advice." But most clients are going to be working with a planner or an insurance agent so it's a great question about how should they prepare themselves, and that really is a terrific issue. How do I prepare myself to be in a good position to hear the things that I need to hear? So, I'm not coming in as a blank slate so everything is kind of washing over me. I'm coming in prepared to say, "So, here are my three priorities. I'm 45 years old. I have a couple of teenagers. We're looking forward to a college education and we know that that's very expensive. My wife, we've had the good luck that she does not have to work and so has been the one to stay at home and nurture the children. I don't expect her to go back to work. And ultimately, we want to retire in the style to which we'd like to become accustomed. And what we accumulate is for us. And if there's anything left over, of course, we want it to go to the kids." That's a very vanilla flavored description of what I think many people would, if they thought about it, that's what they're going to come into the process with.

So, now it would be very helpful if they also have a clearer notion. If I were to die prematurely, that obviously is going to completely upset all the plans. So, what are my questions about that? How can I best, best economically, best structurally, best in a smart portfolio way, how can I best protect against that? Often that's insurance. Insurance is a great way of laying off a certainty. The only thing that's not certain about death is the win. And for a particular price and whether it's term or whether it's full life of particular price, I can buy a certain period of time that I'm protected. Get that done and move on to other things. So, what are those issues for me? When it comes to retirement, my style of investing is likely going to become less conservative in the future than it is now. While I'm working, while I can replace assets, I can better afford to take some risks if I'm a risk-taker now when I can replace assets if I had to than once I retired when I can't. So, in that event, are there things that I can do today that would help me 20, 30 years from now with respect to managing a portfolio when I'm more conservative? And intriguingly, that comes back to Doug's question about whole life. Because well-seasoned whole life, whole life purchased 30 years ago, and you pay the premium, you develop the cash value, here, I'm going to use some technical terms, it's an uncorrelated asset. It's not correlated to the market. The market goes up. The market goes down. Whole life has mostly guaranteed.

So, what happens if the market hits a 2008 skid patch? What happens if the market hits a February 2020 skid patch and takes a really deep dive? That if you're living off the market because you've retired and now you're drawing down, you really don't want to take money out of the market when the market's going down. If you've got an uncorrelated asset, you can take money out of cash value and less money than you need because it's not taxable. So, if I need $100,000, I really only need to take $70,000 out of cash value. Live on that, wait for the market to inevitably recover, and then go back to the market. And that interaction is fundamental to life insurance as an asset class. They're not separate things. They're integrated things. And a well-seasoned whole life insurance policy can really do, we've done the math, can extend the value of the portfolio by many years for having that interaction between the two. We've gone back in time and used cash values to live on versus the market when it's declining and it simply extends the length of time your portfolio can stay intact.

Casey Weade: That's great. We just went down a life insurance wormhole.

Richard Weber: It was a rabbit hole. I agree. I agree to that.

Casey Weade: Well, we jumped ahead and we're about an hour in and I was really hoping to have this conversation around thriving beyond midlife with you.

Richard Weber: Well, let's finish with that.

[CLOSING]

Casey Weade: Well, you know, I think that is a broader conversation and I would really like to have another discussion with you where we focus particularly on Thriving Beyond Midlife. So, I'm really looking forward to having a non-financial conversation with you this time because I know you have just as much to offer in that realm. And so, let's schedule it again in the future. I really enjoyed having the conversation around life insurance. You're obviously very passionate about this industry and the benefits that it can provide to those that you're working with and changing the industry for the better. I truly appreciate that about you, Dick. So, thank you so much for joining me and I look forward to our next conversation, Thriving Beyond Midlife.

Richard Weber: It's been my pleasure. Thank you, Casey.


[END]