What the Heck Is WRONG with Selling?

I don’t know about you, but I have no tolerance for those who try to outsmart the public – just so they look good while everyone else is, in their view, branded awful. It really, REALLY gets on my nerves. I recently put out a media release questioning what – in my view – is the massively misleading information being aired on some TV shows.

Avoid Sales People?

Have you noticed that all of a sudden everyone seems to be of the singular opinion that sales people are toxic? I mean, all of a sudden, some so-called professionals seem to be advocating that by avoiding people who want to sell you something, your life will be better – as if that’s possible.

This is not really a new practice, but I have been noticing what seems to be a theme on most TV and radio shows that I happen to catch, and it appears that this mindset is becoming prevalent. Personally, I think it’s shoddy, unprofessional, immature, hypocritical, and quite frankly, unethical. Let me explain.

I recently was watching a much advertised TV program that was supposed to give folks tips on how to get through the current economic situation. It featured a high-powered financial professional – or at least that’s how the host described this individual. To my amazement, this advisor’s key advice was that people should avoid any financial person whose goal is to sell them something.

Beyond that, there’s a TD Ameritrade advertisement that suggests that dealing with financial salespersons is ill-advised.

And then a colleague of mine in the financial industry recently recommended a book to me. The author was BLASTING what he referred to – I am paraphrasing here – “financial sales books.” He went on at great length about how cruel and dishonest salespeople are.

Everyone Is Selling SOMETHING!

Before we rush to buy into all the any-sales hyperbole, I have a question for you:

Do you honestly know of anyone who is not selling something?

I may not know you personally, but I can answer that question anyway:

Probably not.

If so, they are likely either deceased, incapacitated, unemployed, or retired – hope I’m not missing anyone. Let’s face it, if you don’t sell, you’ll most assuredly wind up bankrupt, either as a business or as an individual.

Every company – regardless of the business or industry – is SELLING a product or a service. Even churches and nonprofits are selling by trying to get you to donate your valuable time, talent, or treasure. Whether you are employed as a nurse, real estate agent, pastor, teacher, TV anchorperson, talk show host, police officer, congressman or woman, financial advisor, secretary, engineer, professor – GET THIS – you are a salesperson!

Whenever companies begin to experience declines in sales, you know what happens? Ask the folks at GM, Chrysler, and anyone else who’s lost their job recently due to the recession. Likewise, any individual in any capacity that stops selling had better be prepared to see red ink on their financial statements.

What I’d like to know is how this guy with the TV special gets away with his con. And that’s what it is – a BIG con job. Whether you are:

• an expert who advises people that the way to ride out the recession successfully is to avoid salespeople all the while encouraging those same people to contact your firm – which doesn’t sell, I imagine – to get their affairs in shape;

• a financial company advocating that folks avoid salespeople but call your independent advisors – who are not selling – to set up or roll over their IRAs;

• an anti-sales author whose book is for sale on a website where people are required to leave an e-mail address so they can be solicited weekly about registering for your paid “special” training to become accredited to join their organization; or

• a CFP trying to woo clients with this headline: Avoid Financial Salespeople – Get A CFP –

if you are any of those, I hate to break it to you, but you are SELLING!

And now, the time has come for me to say “Stop the hypocrisy crap!”

The idea of every salesperson as the sleazy used car dealer is an antiquated and erroneous one. It's high time we all get used to our roles as salespeople and embrace them. If I had my way, my suggestion would be that no one patronize – or buy anything from – those who profess this ignorant idea, as well as the businesses that sponsor them. Since they are NOT SELLING anything anyway, your boycott of their products and services should not hurt them a bit, should it?

Whoa! GM Stock Has Vanished, Too?

Imagine it's June 1, 1999 and you happen to be sitting in on one of our seminars, listening to our webinar, or reading this blog and we tell you NOT to invest your serious cash directly in the stock market. The stock market is rolling and all you have to do is just pick a stock or mutual fund and you are on your way to your "dream retirement."

On that particular day General Motors (GM) and General Electric (GE) stocks close at $66 and $113, respectively. The "experts" at the time - if my memory serves me - are calling these companies Blue Chip stocks, meaning they are HUGE, very stable companies. They advise folks wishing to be wealthy to make those stocks part of their portfolios because they are not going anywhere. They're Blue Chip, remember?

After all, just 10 years prior, on June 1, 1989, GM and GE stocks were trading at $41.75 and $51.63, respectively. If you do the math, you'll find this was a 58 percent for GM and a 119 percent increase for GE. The experts claim? As long as you take their much-advised long-term view - investing for 10 years or more - these Blue Chips must be part of your portfolio.

Then, last Monday - June 1, 2009 - the unthinkable happened. GM, the largest automaker in the United States of America, a Fortune 500 company, an iconic company, filed for bankruptcy protection. In the midst of all the chaos and rumors, here are some FACTS for you, American consumers who may be affected:

Bondholders

Thousands of individuals and certain mutual funds bought $27 billion worth of GM bonds. These will end up owning stock from the reorganized GM worth - GET THIS - only a fraction (less than 50¢ on the dollar) of their original investments.

Stockowners

Those who currently own GM stocks will see their investments essentially vanish. The stock closed at 75¢ per share on June 1, 2009. As of June 2, 2009, the New York Stock Exchange no longer lists GM shares. GM will also be removed from the Dow Jones Industrial Average as of June 8, 2009.

Don't Believe the Hype

Who could have predicted that something the "experts" said could never happen would happen this easily in our lifetime?

I am not an expert, but this is the time-tested common-sense statement I always make:

Holding stocks long enough (however long that is) does not and will never
eliminate risk. These so-called experts cannot and should not be advising
investors - or even implying - that if they just hold their stock long enough,
the risk disappears and they will end up in great shape.

Ten years ago, GM stock was trading at $66; today it has essentially vanished! GE stock, on the other hand, was $113 then; today - after 10 years - it's worth $13.86. Remember, 20 years ago GM and GE were trading at $41.75 and $51.63, respectively. How about 30 years ago? GM was $59.38 and GE was $50. Forty years ago? GM was $77.87 and GE was $90.

And speaking of solid Blue Chip stocks, as the "experts" put it, here are a couple more names for you: Washington Mutual, Lehman Brothers and WorldCom.

To temper the current dismay at GM's bleak status, the company's current CEO, Fritz Henderson, has vowed that the new GM that emerges from bankruptcy will not be at risk of failure in the future. "We understand there are no second chances," he said. "We won't need one."

To that, I say, "Great!" and "Yeah right!"

Just a few months ago the nation's largest automaker's former CEO, Rick Wagoner, insisted bankruptcy was "not an option." I'm guessing you can tell that kind of talk is simply BS! It's similar to the line of crazy talk that most financial planners use to push unsuspecting investors into financial ruin.

Rethink Your Investment Strategy

The sad truth is that when you invest directly in the stock market - via stocks, mutual funds, or whatever - you are betting against an enormous uncertainty. Laser Financial Group has always maintained that retirement planning should NOT be left to chance, as the so-called experts would have you believe. Retirement is certain, and people's livelihood should be, as well. That's why we recommend and help our clients secure less volatile, more stable investments that allow them to enjoy the market's upside indirectly, without the downside risk.

Imagine where you'd be right now if your investments had NOT lost any value last year and instead, your account earned 5 percent interest! Yes, while the S&P 500 index lost more than 35 percent, your investments made gains. And imagine if, when the markets recover, your indirectly linked investment account were credited a higher interest rate - based on an index - up to a cap of 15 percent -for example. This is no dream. It's not only possible, it happens for our clients every day. Isn't this just plain old common sense?

I'll close with a well-known proverb: "Fool me once, shame on you. Fool me twice, shame on me."

Suze Orman Now Says What???

If you pay any attention to the financial gurus teaching about investing in the stock market so you can “live your dream retirement,” you should be able to recite this mantra or something like it: Invest in the stock market for the long term, and you’ll come out great. Generally, long-term is defined by these advisors as 10 or more years.

Of course, the recent turn of events has decimated the investments of millions, including those who have been investing and following these alleged experts’ advice for the long term and the “super” long term, alike.

But whose wealth has taken a more catastrophic drop? The fact is that it doesn’t matter how long you have been saving – if your investments are directly in the stock market, a 30 percent drop, for example, impacts your ENTIRE account.

Let’s assume John has been investing directly in the stock market for the past 35 years and, prior to January 2008, had accumulated $1 million. Mary, on the other hand, has been investing for only 5 years and had amassed $50,000. Their respective account values, based on the 30 percent drop in this example, would now be $700,000 and $35,000. Who is better off? Notice that even those who’ve met the long-term standard (of these “experts”) lose the exact same percentage of their account values.

One of the so-called experts who’s been preaching all this long-term nonsense is Suze Orman. UNTIL NOW, she’s been saying that you need to allow 10 years or more (preferably more) to invest in the stock market!

Apparently, she recently realized that her listeners did not really understand what she meant by that statement or strategy. Interesting that she’s only come to this realization now, after the past few years have proven how shallow, baseless, and quite frankly, impractical this advice is.

So Suze dedicated a segment of a recent show to explaining, re-explaining – or, more appropriately – redeeming herself in the eyes of her friends, readers, and viewers. Before we go any further, watch this 3-minute, 28-second video – and please listen CLOSELY, and I mean very closely. Otherwise, you will need to watch it several times ... unless, of course, you are far smarter than I am.

Let’s Just Say, Consistently

Before going any further, let me congratulate Suze on her recent honorary doctor of humane letters awarded by the University of Illinois.

Now, here are my thoughts. First, I am going to assume that you understand the meaning of the word “consistently,” particularly now that Suze Orman has explained it. I have to tell you, though, that if you understood what you just heard, your IQ is like 20,000, which makes you a super genius. Heck, I don’t understand her strategy, let alone have the vaguest clue about applying it.

I would posit that two critical hallmarks of any financial advisor worth listening to are clarity and simplicity. Based on those criteria, if I were grading Suze’s presentation, I would give her an “F” for fuzzy. But then again, maybe you understand her inscrutable explanation. Please be sure to write and let me know if you do; maybe you can help the rest of us who are still scratching our heads in confusion.

I would think a “financial guru” of Suze’s stature would have understood how critical it was to explain what “10 years consistently” meant to her friends. I reiterate my perplexity, wondering why Suze did not offer this explanation, albeit a wildly confusing one, until now, only after the stock market has eroded millions – if not trillions – of dollars from those who followed advisors like her. Does she explain it in ANY of her books?

While I cannot say so with absolute certainty, this sure sounds to me like an attempt to save face by someone who has been disingenuous, erroneously believing the average consumer is so stupid as to fail to recognize porous, revolving-door financial advice when they hear it.

Look folks, it does not matter what Suze Orman – or any other advisor like her – says, believes, or thinks. You lose money when the stock market drops, regardless of how long you’ve been investing in it. PERIOD!

For far too long, the American public has been brainwashed into thinking that in order to grow a sizable nest egg, they must accept risk, volatility, and unpredictability. That’s simply NOT TRUE. None of our clients has lost even a penny because we apply time-tested, common-sense principles.

Suze Orman claims that if you had been following her advice since 1999 – in that example – you would now have more money. My question for her is HOW MUCH MORE? Just one hypothetical slide show example – like the ones she used to confuse her viewers and try to redeem herself – would have sufficed. Does she really understand the concepts of time value of money and inflation?

Really? Given, as she claims, that money market accounts and Certificates of Deposit are consistently earning high yields. This apparently is true only on Planet Suze Orman, which, by the way, has yet to be discovered by NASA.

Ridiculous, preposterous, comical, bizarre, farcical, absurd, and wacky would not even begin to describe such an assertion. Truly, I am left speechless.

It’s fair to say that I am not in Suze Orman’s head, so I don’t know what she was thinking when she made the claims in this video. But I don’t have to be in her head to make the following assertions:

• Let’s just say that Suze Orman needs to be consistently SIMPLE!

• Let’s just say that Suze Orman needs to be consistently CLEAR!

• Let’s just say that Suze Orman needs to be consistently CONSISTENT!

My friends, doesn’t it just make sense to follow an advisor who CONSISTENTLY exhibits these qualities?

Looky There - Obama Proposes New Insurance Tax to Fund Health Care Initiatives

On Monday, May 11, President Obama’s administration outlined eight new tax proposals.

Don’t worry – I’m not going to list them all here. You can read the details and technicalities elsewhere, like the LA Times, Bloomberg News, The Wall Street Journal – or you can just Google it.

Now, please don’t get confused. This is an entirely new proposal from the one issued Monday, May 4 – what is it with Mondays? – which I wrote about two weeks ago. If you haven’t read that post yet, it would be a good idea to read it so you can catch up.

My purpose here is to discuss the newly proposed changes as they relate to individually owned life insurance contracts.

Transfer-for-Value Exemption Removed

Basically, in plain English, the administration’s proposal, IF enacted and implemented, would tax the sales proceeds when policyholders SELL their contracts to investors (as in Life Settlements) for immediate benefits. The way it works right now is that anyone who sells a life insurance policy generally is taxed on the full proceeds they receive, minus the policy’s adjusted basis. The only exceptions are if the buyer is a settlement provider and the insured is chronically or terminally ill, also known as transfer for value.

The new proposal removes the transfer-for-value exception and requires buyers to report a lot more information to the IRS, including the policy’s purchase price, policy number, issuing company, and the buyer‘s and seller‘s taxpayer ID numbers.

So, your Aunt Elaine and Uncle Eddie needn’t worry, as long as they bought their life insurance policy for its intended purpose: to help pay expenses if one of them should die earlier than the other. If you use insurance contracts for cash accumulation and death benefit purposes, your tax advantages are NOT affected – by this proposal. Say, on the other hand, your neighbors, Bill and Brenda, are in the business of obtaining life insurance policies and then turning around to sell them right away. They will feel the effects of this new proposal in a big way.

I must point out that I am getting quite a kick out of these new tax proposals – seriously! Because they keep echoing what we have been teaching and preaching for a while now. Our prophecies seem to be unfolding, and I have to tell you that it feels incredibly pretty good to have so accurately predicted these circumstances!

A Fact You Can Bet Your House On

The federal government pays for things with tax revenue, and given the two alternatives will always tax more, rather than spend less. This has nothing to do with politics; it’s just how government works. You must realize that the purpose of these proposals is to raise tax revenues.

In this particular instance, the goal is to raise $12.8 billion through 2019 to help pay for the President’s health care initiative. Told ya! And pay particular attention to the fact that no one is claiming there is anything illegal about this – the President simply needs to pay for stuff.

Make a Smart Move

Get your money out of a taxable environment and into a tax-free environment while you still can. If that sounds odd to you, you have more than likely been following conventional financial advice. Or your financial advisor has successfully made you believe the LIE – that a Roth IRA is your best bet. Or you have been brainwashed into believing the myth that you’ll be in a lower tax bracket once you retire, so it’s a good idea to use qualified accounts now.

Rather than gambling your financial future, it would behoove you to get a complimentary consultation with a Laser Financial Group strategist so that you can learn how to preserve your wealth and make your retirement income tax-free. Doesn’t that sound much better than the alternative – being at the mercy of the federal government?

There are a ton of Mondays ahead, and who knows what the next one will bring? Join our clients who enjoy time-tested, proven, common-sense, practical, and legal – yes LEGAL – strategies that help them keep more of their money.

Converting to a Roth IRA Right Now is a Very BAD Idea

Financial "experts" are bombarding the American public with advice about how to salvage their depreciating wealth - courtesy of the stock market's freefall. One very popular - but TOXIC - piece of advice is that now is a great time to convert qualified funds (pre-tax dollar accounts) to Roth IRAs.

Just so we are on the same page, this is NOT a discussion about Roth conversions, in general - we'll discuss that at a later date. Rather, I am challenging those financial "pundits" who are specifically advocating that converting to Roth IRA is smart and prudent after experiencing investment losses. Then again, maybe I'm a bit slow? Continue reading and then decide for yourself.

What They Are Claiming

Here is the whole rationale behind the current movement to convert to Roth IRAs: Since your IRAs/401(k)s have suffered significant losses, converting now will save you on taxes. A recent USA Today article claims, "An IRA conversion is a smart move in a bear market..."

But let's examine this thought process. For instance, assume you had $100,000 in a traditional IRA in January 2008. If you had converted it to a Roth at that time, your tax bill would have amounted to $25,000 (assuming a 25 percent marginal tax bracket). You would net $75,000 in this example. Then, going forward, you would be able to keep your money, income tax-free.

Common-Sense View

The investment choices that these same advisors are advocating withered up your savings, leaving you with around $70,000 (assuming a 30 percent drop in the value of your IRA/401(k), given the fact that the major markets tumbled more than 30 percent in 2008). If you were to convert now, based on their BAD advice, you would net only $52,500, after paying 25 percent ($17,500) in taxes.

Yes, the portion that goes to Uncle Sam is less ($17,500 instead of $25,000), but notice that YOUR portion is down from $70,000 to $52,500. Investing 101 and plain old common sense - a supply of which anyone needs a ton when it comes to financial planning - teaches that a larger seed is better than a smaller seed when starting your Roth IRA.

Financial professionals agree that Roth IRAs enable people to amass larger nest eggs, due to income tax-free withdrawals (provided you are past age 59-1/2 and have had the account for at least five years). And I am in total agreement with that assessment.

What I wonder about, though, is the fact that Roth IRAs have been around since 1997. Where have these so-called financial gurus been all that time? Why did they wait for their clients to experience significant losses - LOSSES! - before it became a good idea to convert to the Roth IRA? Now those clients are ending up with less money. Why are more than 95 percent of financial advisors STILL advocating qualified plans instead of income tax-free alternatives?

Income Tax-Free Withdrawal Is Always Better

I have always maintained that in almost every instance, income tax-free withdrawal is better. And we have always taught and helped our clients to "strategically roll out" their qualified funds at the most opportune time, tax-wise - NOT when they have incurred signifcant investment losses. Notice, there's a HUGE difference.

There's a $100,000 income limit, known as MAGI (your tax advisor is familiar with this term, and if he/she is not, find a new one), on the ability to convert to a Roth IRA. This limit is scheduled to end in 2010. But that should not, and has not, been a challenge for any of our clients. Why not? Because we DON'T use Roth IRAs.

No-Strings Roth

Why bother with a Roth that still has strings attached when the accumulation tool I refer to as "Roth on Steroids" is available? Now that I have your attention, GET THIS: There are cash accumulation vehicles under current law that, when structured and distributed properly, allow for income tax-free access without all of the strings attached to Roth IRAs.

Like, for instance, you can convert qualified dollars, regardless of your income. And my personal favorite: should you die too soon, the portion you paid in taxes due to the conversion is replenished (in most cases, several times over) to your beneficiary, income tax-free, giving your beneficiary way more than you paid in, all things being equal.

Of course, each individual's situation is different, which is why I recommend very careful analysis and consideration by competent tax and financial professionals, in all situations.

To find out more and determine what is best for your situation, request a free consultation with one of our strategists today.

White House to Target Tax Loopholes: Are YOU Affected?

The Obama administration announced last Monday that it intends to close supposed tax loopholes currently being utilized by companies and individuals alike.

OK, to prevent you from wondering, yes. This is not a political blog. However, this proposal may have a direct impact on your financial future, if you live and accumulate your retirement wealth in the United States.

Taking Advantage of Tax Loopholes

It is critical for you to understand that a tax loophole is simply an alternative or way out that is perfectly LEGAL. It would have been another story if they were illegal, but notice that no one is claiming otherwise – although I personally believe that most news outlets packaged their reporting about this proposal in a way that indirectly suggests the loopholes are illegal.

Suppose you lived next to a state with no sales tax and you figured you could save, say, $200 on a major purchase by driving 25 minutes across state lines. Would you make the drive? How about if you regularly commute to another state where sales taxes are waaaaay lower? Would you shop there for the exact same items you could buy at home for more? What about online purchases, if they save you money on sales tax? If you answered yes to any of those scenarios, you just used – or proposed using – a tax loophole. And, in case you were wondering, I live in Maryland, Virginia, West Virginia, D.C. and Delaware! Awesome, huh?

However, Laser Financial Group has always maintained, on our website and in all of our printed materials, that people and companies should NEVER plan around tax loopholes. Man, do we feel like geniuses today!

How Will It Affect You?

Regardless of what the political pundits say, I contend that the #1 headache of ANY administration is to figure out how to pay for stuff. And, as I have always taught, the federal government (Democrat, Republican, or whoever) has only one form of revenue: TAXES.

If you’ve heard me speak or read any of my writings on this subject, you know that I’m not a fan of higher taxes. Who is? Wait, Uncle Sam is – shhhh! However, the reality is crystal clear. The only way the federal government will be able to get a handle on our humongous national debt – and pay for new stuff – is to tax more now, and in the years ahead. It MUST happen, and it’s going to happen. The only alternative is to spend less, and you know how completely unlikely that is to happen.

According to a CNN story, “The administration expects the initiative to raise at least $210 billion over the next 10 years.” And, that’s the whole purpose – to raise revenue. Not to fix illegal behavior, because this behavior is NOT illegal.

Is It SMART to Have Your Wealth in a Taxable Environment?

Sadly, the majority of Americans are using tax-deferred retirement accounts – e.g., 401(k)s, IRAs, TSAs, and 403(b)s – because their so-called advisors are completely clueless, brainsick, or simply do not care. Look, none of those advisors can remotely guarantee that you’ll be in a lower tax bracket when you begin drawing income for retirement and Uncle Sam cares about paying his bills, NOT yours.

Why not join the select few who have discovered and are using the absolutely income TAX-FREE alternative? It is perfectly legal, no loopholes (President Obama approves of that), and based on existing tax law. Why is only a tiny percentage of the population using it? It’s because more than 95 percent of financial advisors don’t know what they are talking about when it comes to retirement planning.

Call us today at (301) 949-4449 for your free consultation so that you can work with one of the five percent of financial advisors who can set you up for this income tax-free alternative!

Remember Stewart vs. Cramer? Someone Was Left Out

Whoa! On the March 12, 2009, episode of "The Daily Show," Jon Stewart - for lack of a better word - hammered Jim Cramer of CNBC's "Mad Money." My regular readers can probably guess my reaction. For those of you with short memories (or who somehow missed the brouhaha), this statement sums up Stewart's entire point:

"I understand that you want to make finance
entertaining, but it's not a ... game."

I really, really wish I could emphasize the missing word indicated by the ellipsis in that statement, but this is a family blog.

Watch the clip yourself and you can fill in all the blanks.

The Daily Show With Jon Stewart	M - Th 11p / 10c
Jim Cramer Pt. 2
thedailyshow.com
Daily Show Full Episodes Economic Crisis First 100 Days

Here are my thoughts on the Stewart-Cramer conflict, and the crisis to which they were referring:

1. Aren't we supposed to be living in the land of freedom, where we are all accountable for our own actions? Why in the world should poor Jim Cramer take all the blame? I'm sure if I were on Cramer's show selling a stock, he would insist, "Buy, buy, buy - right now!"
   
   
2. Don't folks know that stocks roller-coaster? And always will? And don't they realize that our self-proclaimed prediction gods - or rather, devils - are worthless, at best?
   
   
3. What about all the other "Cramers"? These so-called "experts" that surround us? The newspaper articles, websites, and blogs that rain down Cramer-like advice by the second? I suppose we could argue that they are exercising their freedom of advice, and the public should likewise exercise their freedom of choice to tune them out.
   
   
4. Have we learned anything at all? Or are we simply awaiting the next catastrophe that will give another pundit or expert the chance to rally us to do something against our own best interest so that Jon Stewart can invite that person on his show and entertain us some more?

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Laser Financial Group provides a common-sense approach to finance without all the hype.
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