Questions to ask about LIRP? Or just a scam?

[JohnnyBGoode]

I got a brochure in the mail a few weeks ago about a two-night course around retirement planning at the local community college. Normally I disregard items like that since my own research plus resources like this forum give me what I think is a solid foundation. Plus I'm generally skeptical - no such thing as a free lunch, right?

Anyway, the class writeup was very well done and since it said it was going to talk about taxes, social security optimization, and related topics and since it was free, I figured I could spare two Tuesdays from 6:30pm - 9:00pm.

So the first Tuesday (last week) it was pretty interesting and I did learn some details about SS withdrawal strategies, Roth conversions, etc. that I didn't know before. The instructor was a financial planner but no sales job at all during the class. However, at the end of the "class" he passes out this book to discuss at the next class - it is "The Power of Zero: How to Get to the 0% Tax Bracket and Transform Your Retirement" https://www.amazon.com/Power-Zero-Bracket-Transform-Retirement/dp/0989000192.

So now I see where the whole thing is going and I figure that I won't even go back for the second meeting. It is a sales job for LIRP (Life Insurance Retirement Plan). I have no interest in mixing life insurance (which I do not need since our finances are in great shape and our kids are both out of the house) and my investments. Plus I invest is low-expense (0.05%) broad market funds and I don't need to spend 1.5% on LIRP fees. Seems like a scam or close to it.

But then I thought - just to be sure - is there any validity to this? We do max out our 401K and SIMPLE IRA, so we don't have any other tax-deferred account options. Is there any scenario where it makes sense? Thanks!

 

[pb4uski]

....Is there any scenario where it makes sense?....

No. Run.

 

[Blue Collar Guy]

Go to the class ,see what he has to say. Just dont commit to anything.

 

[RockyMtn]

No. Run.

Run fast!

 

[Ready]

We get questions like these from time to time and the usual responses are run away, fast. If you are highly gullible and think someone is capable of selling you something solely based on their ability to be persuasive, then perhaps you should protect yourself from these people by staying away.

If it were me, I'd go, see what he has to say, and if I didn't agree with his pitch, I would let him know why in a polite way, then move on. But I always learn something from these pitches and never find them to be a waste of my time.

I do get solicitations from community colleges on a regular basis offering these retirement classes. They are usually $59 for two sessions, and you can bring a spouse or guest for free. They make it clear that they are in the financial services business, and that they will offer you a consultation after the class to see if you are interested in their services. You are always free to decline and leave after the classes are over, no strings attached.

 

[capjak]

Read the book, i did, has some good information in there about Roth Conversions etc... and discusses LIRP,

 

[JohnnyBGoode]

Read the book, i did, has some good information in there about Roth Conversions etc... and discusses LIRP,

Yes, I read it too and found the discussions of Roth, etc. to be nicely done. Talk about a quick read - 1 hour or so!

 

[JohnnyBGoode]

We get questions like these from time to time and the usual responses are run away, fast. If you are highly gullible and think someone is capable of selling you something solely based on their ability to be persuasive, then perhaps you should protect yourself from these people by staying away.

If it were me, I'd go, see what he has to say, and if I didn't agree with his pitch, I would let him know why in a polite way, then move on. But I always learn something from these pitches and never find them to be a waste of my time.

I do get solicitations from community colleges on a regular basis offering these retirement classes. They are usually $59 for two sessions, and you can bring a spouse or guest for free. They make it clear that they are in the financial services business, and that they will offer you a consultation after the class to see if you are interested in their services. You are always free to decline and leave after the classes are over, no strings attached.

Yep, that sounds about right. As I said, I actually did learn a few things at the first meeting and I am confident in my current direction, so I'm not worried about being "swayed" against my will. One thing that was discussed at the first class which I do think is valid is that tax-deferred savings are generally predicated on lower taxes in retirement. His point was that this is not in any way a guarantee and in fact they could be higher in the future. I agree with that - it won't change my investment strategy in tax-deferred accounts - but I do think it is an interesting point. Take the tax hit now when taxes are a known quantity vs later when they are unknown and *could* be higher.

It is also ironic that the "tax rates will be going up" discussion in the shadow of the current tax proposal on the table in DC. Whether that will in any shape become law is of course also unknown but it does show you really can't predict the future...

 

[OldShooter]

The sad thing, apparently, is that those community ed classes are taught by salespeople who volunteer in order to reach prospects. I saw one in our local school district catalog that looked like such a scam that I spent $15 to attend. I then wrote a detailed letter to the head of community ed to explain the scam. He called me immediately the next day and we talked for a half hour or so. The classes are gone from the catalog. He also asked me if I'd be interested in teaching an investment class. I declined but am now reconsidering. It might be kind of fun and there are a lot of people out there who do not have a clue what to do with their 401K type investments. So I might just do it.

The other thing about these "teachers" is that they need to hustle vulnerable clients because they clearly aren't getting the referrals that the good and effective advisors can make their livings from.

 

[JohnnyBGoode]

The sad thing, apparently, is that those community ed classes are taught by salespeople who volunteer in order to reach prospects. I saw one in our local school district catalog that looked like such a scam that I spent $15 to attend. I then wrote a detailed letter to the head of community ed to explain the scam. He called me immediately the next day and we talked for a half hour or so. The classes are gone from the catalog. He also asked me if I'd be interested in teaching an investment class. I declined but am now reconsidering. It might be kind of fun and there are a lot of people out there who do not have a clue what to do with their 401K type investments. So I might just do it.

The other thing about these "teachers" is that they need to hustle vulnerable clients because they clearly aren't getting the referrals that the good and effective advisors can make their livings from.

Yes - that makes sense and that bothers me as well - it is pitched as an education event, held at the community college, at no cost - the brochure makes no mention that the teacher is a financial planner with a vested interest in selling products. That being said, he was very up front about it at the beginning of the session. Given there really is no free lunch I don't mind a soft sales pitch if I don't have to pay for it - but the lack of disclosure in the brochure isn't quite right. Maybe I will provide the feedback to the college as well. Thanks!

 

[MRG]

Run fast!

+1

If you can find road apples pick them up and throw them at your opponents. Otherwise run like he!!.

 

[nun]

LIRP is just Whole Life Insurance. There was a long, yet interesting, discussion about this a few months ago and the general consensus from everyone apart from the life insurance sales people was that Whole Life is a very poor and expensive way to save/invest for 99.5% of people. There is a very small number of very wealthy people and business owners that might benefit from the tax shelter, but most people should run away and concentrate on ROTHs, 401ks and low cost regular investing.

 

[OldShooter]

... Maybe I will provide the feedback to the college as well.

Really, you should. The college doesn't want to be promoting something that is between a bad investment and a scam, but they really aren't in a position to vet every proposal they get. You are a smart customer who isn't going to be tricked, but by reporting the issue you are doing a huge favor to those who might be more ignorant or more gullible. If you prevented even one mistake, that would be worth the effort IMO.