What if Experts Disagree?

What if the Experts disagree? I’ve got a number of questions lately from different clients and other people I’ve met about, hey, what about this, or this or this person says the opposite of what you’re saying, or I heard on the news, this, or I read this book that claim that and it’s different than what you say. So, you know, they’re experts, you’re an expert? How do we make sense of when Experts disagree? Who’s right? Who do we trust? So I just want to address all of those.

None of those are probably big enough in to do a whole podcast on but I’ve gathered together a bunch of those types of questions. And basically just around the idea of what happens when the Experts disagree. So there’s a number of reasons that can cause this. And so we’re just going to rattle through some of the things that I’ve kind of thought through.

Conflicts of Interest

Number one would be, you got to look at the conflicts of interest that this expert might have, right? Why might they be recommending this strategy or product? What do they have to gain? If they’re right, if they’re wrong, or if you do or don’t do what they’re telling you to do?

“Experts”

So for the biggest one that we always bring up, right is that pretty much the only people that recommend annuities, and permanent life insurance, or people that sell them. So there’s a lot of financial experts out there that say that, you know, if you’re in retirement or approaching retirement, you should have annuities to guarantee some income and, you know, keep money out of the scary, risky market. And if you’re younger, or even if you’re older, whatever, like at all times is a great time to own whole life insurance, or universal life insurance, other permanent life insurance products, right, or long term care. These are two things, you have financial experts that recommend that everyone or most everyone get these products.

Freeman

Then you have people like me, also a expert, if you want to call me that, who say no, almost no one should have these things. So who’s right? And again, that’s where we go to the conflict of interest of people who recommend these things, get paid a lot of money to sell them. They get paid, massive Commission’s when people agree, and sign up for these products. And people who don’t get paid to recommend them or not recommend them don’t.

And it’s not just me, right? If you go look at any personal finance, blogger, any personal finance expert, any of these, almost all of them who don’t sell insurance products, don’t recommend them. All the most popular personal finance books out there by people who don’t sell the products don’t recommend them. So what does that tell you? It tells you which experts in this scenario you should be listening to, and which ones you should ignore. So look at the conflicts of interest. That be the first thing I would say, when you’re determining which expert to pay attention to.

Imbalance of Examples

Billionaires

Another thing I’ve run across a bunch of several people actually brought this up is you could have like imbalances of examples, we’ll call it where they will say, Hey, you should do this, because these people do this, or this institution does this right? So for example, they say, Well, you know, Warren Buffett does this. So you should too, you know, he’s an expert. And so you should do whatever Warren Buffett does. And there are definitely some things that Warren Buffett does, that we can all do. But the difference between what a billionaire does with their money, or what we as regular everyday Americans do with ours, we gotta admit, there’s going to be some differences, right?

There’s big differences between what you choose to do with your money when you got millions or billions extra. And you’re trying to make a little bit more on those extra millions or those extra billions that you have, versus the person that’s just trying to make sure they have enough money to pay their bills and have a little bit of enjoyment in retirement. But those are two different things, saving for survival versus saving for world domination. And so while there are great, there are principles that Warren Buffett does, that we can all emulate and all do, the exact way that he invests as multigenerational, just leave it all in there. Those types of those kinds of things don’t always apply to us, by all their say, you know, these institutions do this, and they have billions of dollars. So you should do it too. Right?

Institutions

A common would be like the Infinite Banking scheme, where they say, well, banks do this all the time. And so you can be your own banker by by doing the same things. But again, what a bank does with its money, where people just give it money, and then they lend it here, and they pay interest there. They make a spread on the difference there and they charge fees and all that are completely different from what we as individuals do with our money. People will just walk up and hand us money, and then we put it here and pay interest. They’re like we don’t do that.

So what institutions what banks, what, trust funds, what pension plans, all those things, what they do with their money that they’re in charge of, they’re just different than what we’re going to do with ours. So you can just ignore for the most part, those examples.

Differences of Opinion

A third option would be just differences of opinion. This is going to come into play sometimes where they are We’re experts that disagree on what you should do going forward. And a lot of that’s just going to be no one knows the future. There are no facts about the future. And so what I might say someone should do going forward might be different than another financial advisor that I may very, might respect a lot what they’re going to tell you to do.

International Investing

So for example, like I generally don’t recommend investing in international equity funds. There’s a lot of people that I really respect that would say that you should, that’s a difference of opinion. I don’t believe that international investing is going to do as well in the future because it has not in the past. And some other people would say, Well, it hasn’t in the past. So now it’s set to do well, in the future, there are no facts about the future, we won’t know which of us are right until we get there. So it’s a difference of opinion.

Real Estate Investing vs. Equity Investing

Same thing with like real estate investing versus equity investing, we can both look at things in the past, and have our opinions about what’s going to happen in the future. And sometimes, they’re just going to come down to differences of opinion. And that’s fine. So there’s going to be some of that.

Variation of Audience

Another big one will be like variation of audience. Like, who are the experts talking to? And I think the biggest thing comes when you have an expert that’s talking to a wide broad audience, versus your fiduciary fee only financial planning, you’re talking to you directly.

Paying off Debt

Take things like paying off debt. Dave Ramsey says that it can pay off all your debt, and then never get debt again. And that’s really good advice for the general public, when you’re talking to everyone. And yet, we might say, hey, even though you can in retirement, buy this car in cash, we are better off financing it for this, that, and these reasons. Which is completely different than someone who’s buying a car they can’t afford with money. They don’t have to impress people they don’t really like. And so, but but the the message that you’re going to tell to a general audience is way different, because you don’t know their exact situation and their exact circumstances.

Social Security Claiming

Or, and this one’s come up a lot recently, I will frequently, not always, but frequently have my clients take Social Security right away when they retire, like right when they retire. Or if they retire at 60. Take it right away at 62. At least one of them. And there are a lot of experts around that. So I’ve had a few people say well, you say to take it now. But I’ve read this, this and this and seems like everything else says to wait all the way until age 70. Or at least till full retirement age and to never claim early.

You know, so why are all these experts saying this? And you’re saying that I should take it early, again, if you’re reading a public blog posts, or public news article, or a public book that’s been published on that, that can be read by anyone. And don’t quote me on this. I don’t know what the exact stats are. But I thought I feel like I’ve read things like 40% of Americans over age 60 have nothing save for retirement, literally nothing. And I should have pulled the actual figures. But it’s things like that, right. So there’s a wide number people that don’t have anything saved, don’t have don’t have an IRA don’t have a Roth don’t have all these things. And so for them, their only income in retirement is going to be social security.

If you were going to work longer, take it later have a bigger income stream, or telling people publicly to take it earlier. If you were going to take a stance versus just saying it depends. Which one would you do if you were an expert, tell people take it earlier where they might not then run out because they don’t have enough because all they have are tell them and take it later and keep them working and get that to be as big as you possibly can make it for me. If I was just saying that the “Hey, most people should probably wait.” But, you individually, with everything else that you have going on, should take it.

Or even when you return this as well, even if you have an IRA and all these other things, you should still wait. And again, that depends if the rest of your money is in fixed annuities, and bonds and fixed income and cash and all these things, then the rate of increase of your social security may be better than your investment accounts. In which case you’re better off draining your investment accounts and letting Social Security build than the other way around.

If you follow our model and our strategy, you are reasonably better off doing the opposite. Instead of draining your accounts waiting for Social Security, to augment your accounts with your social security and for tax reasons and all these other things. That’s why not all of them, it does still depend. But for a lot of clients, we have them take it earlier instead of delaying it. So the variation of audience is going to determine is your expert talking to everyone or you specifically.

Lowest Common Denominator

Alright, and because when you’re talking to everyone, you need to you need to go to the lowest common denominator. Whatever the dumbest person in your audience is going to think that’s what you need to play to. It’s kind of like in our industry, we have errors and omissions insurance. And when I was with the broker dealer everything back in the day and under the insurance umbrella and all that my errors and omissions insurance that I had to pay was eight times what it is now as a fee only fiduciary because the number Have numbskulls that work in that industry that would make mistakes and have claims against them were so much right they had, they had a price that to capture the lowest common denominator.

The dumbest financial advisor that’s out there and what they’re likely to do and recommend, and cheat and do all these other things. And so they have to price it to account for that. And even though I’m not going to do any of those things, I still have to pay the premium that’s going to address that. But when you’re in the fee only fiduciary world, people don’t do that. So there are no claims or virtually no claims. They can price it, literally an eighth of what I was paying before. There’s a big difference when you’re when you’re taking talking to a group, or an individual. So, you’re going to see those differences in opinions of experts.

Difference of Goals

Then the last thing I would say would be differences in goals. What are we actually trying to achieve? Because some people, when you’re listening to experts, whatever their main goal might be for you to maximize your wealth, for example. Or maybe to protect your wealth, and make sure that you don’t have any variation, it may be to enjoy life and get the most out of life. Whatever that main overarching goal is, the advice is gonna be different for those people. And, you know, I have some of the things that I believe and teach publicly, but then also individually for each person is going to matter. What is that ultimate goal, right, and some things sound really good on paper.

Maximize Wealth vs. Enjoy Life

We did a whole episode on Die With Zero on that concept of the book that was written on it, which I really liked a lot of the concepts in that book about, you know, not just waiting in passing with tons of money, but enjoying it along the way. But one of the things that he talks about often in there is getting an annuity. And if you put all your money in annuities, then you know, it pays out an income for life, and you can never outlive it, and you can actually die with zero. And die was zero sounds, you know, it’s catchy, it’s powerful, like it grabs you on the book die with zero, you know, it’s a powerful phrase. But that’s not really the goal is it?

What’s the true goal?

The real goal behind the catchy phrase is to maximize your life and maximize the enjoyment of your money. And you can do that without annuity, you can do that better with annuity and you can do as much as you can with an annuity and then not die with zero, still die with something and still maximize your life. But you can get both you can have your cake and eat it too. Which is why I don’t recommend an annuity. And so if your true goal, your actual goal was to die with zero, then buying an annuity would be a good way to do that.

But I think most people’s true goal is to enjoy retirement enjoy life, and still have something left over. And so there are better ways to do that than buying an annuity right or, and there’s another book, The Power of Zero: how to get into the 0% tax bracket and transform retirement, something like that, by David McKnight. And that talks about how you can pay no taxes and retirement, and to do all these things and talk a lot about using permanent life insurance and some of the other things is a fancy way to do that.

Again, if your real goal is to pay nothing in taxes in retirement, then that might be a good way to do that. He’s an expert, and he’s a CPA, he’s got some credentials, right? And he says, if you want to get into the 0% tax bracket and pay no taxes in retirement, here’s some good ways to do that.

But again, I don’t think that’s the real goal. I think the real goal is not to pay the least amount of taxes. The goal is to have the most amount of money after taxes. We always put all your money in cash and you you would earn no interest. You’d earn no dividends, have no appreciation, pay less in taxes, and you’d also have way less money.

We could pay a ton of taxes now and have all your money in Roth and permanent life insurance and get paid nothing in all of retirement. But you wouldn’t actually pay the least amount of taxes over your lifetime. You wouldn’t have the most amount of money in the end for the same amount of spending. So if that’s the goal is just to pay zero tax in retirement, then what he recommends as an expert will achieve that. But that’s not the real goal is it? The real goal is to have the most amount of money and the most amount of life after taxes. And that’s where my advice can differ from other experts, because we have different goals.

Conclusion

Part of my job right is to help challenge people’s goals to make them more concrete. To take what’s the goal behind the goal sometimes, and to sometimes people have goals just because they’ve heard it’s a good idea. Then when we dig deeper. We find out what their true goals are and then we build an exclusive plan for them to help them achieve their individual goals as a single person or household, not as a broad audience.

We do that with minimal conflicts of interest. My conflict of interest is that you have to pay me but you know exactly what you’re paying me. You know exactly what you’re getting. I’m not paid to sell extra products. I don’t you know, I preach this podcast is mostly for my clients reinforcing what we already talked about. Some of you or else are listening to them, even though you’re not clients. And so this is sort of a broad audience. But, the actual advice comes on the individual level. That’s where we say at the end. Don’t take advice from people who don’t know you or your situation, because how would we know all these things if we didn’t know that? So rather than taking advice at the lowest common denominator, take it at your situation to support your goals. Hopefully that’s helpful and just explain some of the reasons why all of us experts tend to disagree. And we’ll see you next week. Cheers.

This article is educational only and is not intended to be investment, legal, or tax advice or recommendations, whether direct or incidental. Again, this is not investment advice. Consult your financial, tax, and legal professionals for specific advice related to your specific situation. Never take investment advice from someone who doesn’t know you and your specific situation. All opinions expressed in this article are those of the people expressing them. Any performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be directly invested in.