Why haven't I heard of this before?

One of the first things people say to me after hearing about the infinite banking concept is, "Why haven't I head of this before?" Second only to "this is too good to be true" and "it must not be legal." Both of which, I assure you, it is not.

You don't know what you don't know

The truth is, we don't know what we don't know. That's the same for advisors and finance professionals. Heck, many insurance companies don't fully utilize their policies in this way.

Who is profiting from your lack of financial knowledge?

We need to look at where we are getting our information from. I had a client last year that was recently retired and had hired a new financial advisor at a different bank, and were considering adding whole life insurance to their financial plan. When meeting with the new advisor, they asked his thoughts on whole life insurance. The advisor got quiet, sat back in his chair, and told them that "anyone with wealth has whole life insurance in their portfolio." He offered the name of an agent he knew, but could not help them because he doesn't sell it. Thankfully for this couple, while this advisor had no knowledge of infinite banking, he understood the power of the growth, protection and tax benefits their policies would provide. He put their interest ahead of his own, and advised them to go ahead with the plan they described.

Consider this: Big banks own whole life insurance, but they don't sell it. In fact, banks are one of the largest holders of whole life insurance in Canada. They don't sell it because they profit from your lack of knowledge. Investments are only the beginning. They certainly wouldn't want you to know you can leverage your own funds to finance the things you need, making their lending options obsolete.

Arrival Syndrome

Sadly, not all advisors are this receptive to their client's needs. Another client recently decided to cancel a term policy with another advisor in favour of a whole life policy that would provide more protection and would enable them to have access to the cash surrender value immediately. We developed a plan to use this cash value to pay off their mortgage in 5 years, rather than the 25 that were still owing. The other advisor did not think it was not possible to have access to cash value immediately, and when we showed that it was both possible, and in the client's best interest, became hostile towards the clients! I was able to cancel the old policy from my end, and the clients are happily following their plan to financial freedom.

Growth Mindset

The trouble with the second advisor is that he was stuck in his way of thinking. He didn't think it was possible to do something outside of what he was taught, and was not receptive to learning new ideas.

Of course, the infinite banking concept is not a new idea; it has been used for over a century by the 1% to preserve the family wealth. Just Google the Rothchild Waterfall Method. (You're welcome). It feels new because word is getting out that this idea is not just for the ultra-wealthy. This method can and should be used by every Canadian!

Please don't get me wrong. I'm not saying all advisors are bad, or ill informed. As professionals, we tend to stay in our own lane and shouldn't advise on things we are not familiar with. This is why I will never tell you what to invest in, or give tax advice. If you have an advisor, accountant or tax lawyer, I'd love to involve them in the conversation to help build a comprehensive financial plan.