Wednesday, July 23, 2014

The Pothole in Wealth Management - Summer Sales Ideas for 2014

To read the complete blog article which provides details and sample illustrations supporting the content in the video above, go here

What follows is an abbreviated version of the blog content:

Real wealth involves sustainable after tax cash flow coupled with maximum net worth invested at comfortable yields.  Note the use of the phrase "after tax cash flow" not "after tax income".  This often means accessing principal from weaker assets while allowing stronger assets to accrue as long as possible.

Case Study Video, Good Logic vs. Bad Logic™ (8 minutes)

For the full version of this video (17 minutes), please click on the link at the end of this blog post.

Example:  Simon and Ann Scott are age 55 and 50 and plan to retire in 10 years.  They have almost $6.5 million in net worth (IRAs, CDs, Munis, Equities) and $900,000 in home value and personal property.  They want $25,000 in monthly, after tax, retirement cash flow indexed at 3.00% as an inflation offset.  It's the first day of the first month of their retirement, and they need $25,000 for the month.

But now the pothole ...

From which account do they take it?  And does it make any difference?  You bet it does.  They can take it out smart (we call this Good Logic) or they can take it out using guesswork (we call this Bad Logic).

In their case, both Good Logic and Bad Logic produce the needed level of after tax cash flow over their years of joint life expectancy (40 years in this example); however, net worth is a different story.

The result is a difference in long-range net worth of $12.5 million in favor of Good Logic.  If you were their adviser and didn't help them determine this, you had better hope a competitor doesn't.

So, how do you do this calculation for your client?  Well, you could program Excel to do a factorial solve (1 x 2 x 3 x 4 = 24 solves each year for 40 years in this example).  If you have, say, 10 asset classes, it would take 3,628,800 million solves each year for 40 years.  You probably don't want to have Excel do that.

If this is your initial introduction to Wealthy and Wise®, you may want to watch the Comprehensive version of our "how to" video where we take your through the sample case step by step using our Wealthy and Wise® planning system.

Comprehensive version including the Case Study (17 minutes)

Good Logic vs. Bad Logic™ Video (Comprehensive)

If you are licensed for InsMark's Wealthy and Wise® and would like to review the menu prompts we used for this analysis, please email us at and we will get the Case Data file (Workbook) right out to you, (be sure to ask for the Workbook for the Blog #8: "The Pothole in Wealth Management, Good Logic vs. Bad Logic™").

For a license to use Wealthy and Wise®, go to or contact Julie Nayeri at InsMark at or 1-888-InsMark (467-6275).  Institutional inquiries should be made to David A. Grant, Senior Vice President -- Sales at or 925-543-0513. For the best life insurance carrier and appropriate product selection, contact the Ash Brokerage nationwide Life Team at (800) 589-3000.

About Steve Savant

Steve Savant

As the National Marketing Spokesperson for Ash Brokerage, Steve Savant looks forward to meeting financial professionals in every way possible - in person or by video through conferences and social media.

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