Dave Otto CFP®️ CLU® CH.F.C.®️ EPC®️ AIBCP®️
Certified Financial Planner®️ – DO FINANCIAL Canada
Authorized IBC®️ Practitioner®️ – INFINITE BANKING CANADA GROUP
A good attempt to cover the topic of Infinite Banking® in a November 21, 2023, Moneysense.ca article by Jonathan Chevreau. https://www.moneysense.ca/columns/retired-money/infinite-banking-in-canada/
I quite enjoy Jonathan’s opinions, however, this one missed the mark.
What is Infinite Banking®?
Infinite Banking Concept® (IBC®) is a personal finance strategy that allows people and businesses to control their financing needs by capitalizing then leveraging (with no invasive credit requirements) dividend-paying life insurance (DPLI) policies as their own bank to recover lost loan interest leading to a reduction or elimination of doing business with the banks.
IBC® is trademark protected under Nelson Nash Institute™ (NNI™). Despite that, many advisors use it without permission and without successfully completing its required Authorized IBC® Practitioner® (AIBCP®) course and interview process.
Jonathan and all his quoted advisors are not AIBCPs®. Authors and those wanting to investigate if IBC® is for them should be contacting NNI™ and AIBCPs®.
What is an AIBCP®?
AIBCPs® are a type of financial professional that is set apart from among the ranks of the three-quarters of a million licensed financial experts in the U.S. and Canada.
These individuals may be attorneys, CPAs®, CFPs®, CLUs® or even stockbrokers, but in addition to their given trade they also practice a unique financial strategy that they teach to their clients.
AIBCPs® must successfully complete the in-depth IBC® Practitioners course, be interviewed, and ultimately accepted before membership is granted.
AIBCPs® advise on “sound money”. Sound money is money that never loses value. DPLI is the world’s most secure storage of liquid usable wealth.
Radically Different & Appreciably Better
IBC® is so radically different from traditional wealth building strategies and the results so appreciably better that these practitioners are beginning to receive notable interest.
The technique is so all-encompassing that it is not too far fetched to say that no other strategy will ever be needed in order to get the desired financial results.
AIBCPs® are an elite group with Canadian members only numbering around 50.
Infinite Banking Canada Group (IBCG) is a group of independent financial advisors across Canada who are AIBCPs®.
IBC® is not just for retirees. It could be the right fit for many Canadians.
Endorsed by a Certified Financial Planner®
As a financial advisor for 40 years and a CFP® for many of them my research of a 33-year-old no risk dividend-paying life insurance (DPLI) policy produced virtually the same return on after fees, time, taxes, risk, than the S&P/TSX Composite Total Return Index. This means the risk-adjusted return is significantly better with DPLI. Yes, some may do better with stock market returns but the majority do not.
Like a HELOC
Its borrowing feature is no more complex than borrowing from a LOC (line of credit) or a HELOC (home equity line of credit) – both of which must be paid back based on the bank terms. IBC® is a secured life insurance equity line of credit (LELOC) – which gives you control of the payback terms. To call IBC® unethical is like calling a LOC or HELOC unethical. All are provide access to equity.
IBC® is new to many, I suggest mainly due to conflicts of interest of institutions love for investment fee revenue they receive – prior to this honey hole DPLI was the primary means for people to save.
IBC though is not new. Its been around for over 175 years.
Not Universal Life
Universal Life (UL) is not endorsed as part of IBC®. Since UL values can lose money it is considered unsound money. Only DPLI is sound money.
I will agree commitment does turn some away from IBC® – but saving 10% monthly is a sound money commitment that many are not doing. Many would save more with IBC® than with any other financial product.
Don’t Cut Down the Apple Tree!
One of the key messages of IBC® is not employing the favorite “save then redeem” (cutting down the apple tree) strategy – which is the opportunity cost lost on what that money would have earned if not redeemed) – which means paying cash is the same as financing – sadly that’s what people do in retirement.
The comment about collapsing a policy too soon makes no sense – why would you collapse the world’s safest storehouse of tax-free wealth?
Yes, Canadian tax rules are discriminatory – which wrongly taxes DPLI as though it is an investment – since DPLI has no risk it is wrong to classify it as an investment – investments contain risk.
Banks vs IBC®
Banks are so profitable because they earn ~900% on people’s deposits. IBC® allows people to borrow from their DPLI like a HELOC – the difference is as an owner of the life insurance participating fund they get the benefit of using the life insurance company’s money – to finance their purchases – guaranteed, with no invasive credit checks – and since policy loan interest is revenue that fuels policy dividends, and as a policy owner, they receive these dividends – so in a way they are recovering some of the loan interest that they otherwise give to the banks.
Price vs Value
Commissions are lower for IBC® than other life insurance products – and commonly less than fees on investment products over a lifetime of investing, and commissions earned on real estate and other sales.
Price is only an issue in the absence of perceived value.
Since IBC® creates more wealth and with lower fees than conventional financial planning strategies why are commissions viewed as an issue?
To suggest that advisors are promoting IBC® for only their gain is flagrant. Advisors don’t win unless the person writing the cheque wins. Since IBC® involves some learning its highly unlikely this is the case.
Rethink Your Thinking
As Nelson Nash says, its time people rethink their thinking, including advisors, and the media.
People want the many things IBC® provides that current investment vehicles and strategies are not delivering. Continuing to do the same things and expect different results is not the answer.
Only Discuss IBC® with an AIBCP®
Would you ask your family doctor to do your brain surgery? For IBC®, insist on an AIBCP®.