his week’s letter, this week’s letter comes from letu, little Lupita. Little pizza writes, Dear George gee, what’s the difference between intelligence and wisdom? And how do you feel about conspiracy theories? Not just one question in there, but to to break questions. Lupita thanks for taking the time to write in and to ask. Let me start with the second one first. I love conspiracy theories. I mean, who doesn’t have fun? Put on your tinfoil hat. Maybe sometimes it’s just a question of exercising your critical thinking skills and trying to figure out and get down to what’s going on here. What is really actually going on here, there’s truth in there somewhere. It’s our comms razor says that the correct answer is the most obvious, correct solution is the most obvious solution. So there’s a lot going on there. And in terms of wisdom versus intelligence, there is a big difference between wisdom and intelligence. In fact, I’d go so far to say that there is an absolute ocean of difference between those two things from the perspective of money and personal finance, you can think about financial literacy versus financial wellness, where financial literacy is obviously what you know. And financial literacy is what you actually do. So it’s that behavior gap. Just because I know how to do something doesn’t mean to actually do it. And you, you know, little Lupita, and, dear listener, watcher viewer, you know, there are plenty of smart people who just can’t get their acts together, they cannot pull it together, you know, tons of highly educated people, people that have been through the best educational background, they went to prestigious elementary schools and middle schools and high schools and Ivy League schools, and they have advanced degrees. Maybe they’re even doctors, and they’re morons, there are record everything. Well, sounds like that. Who else sounds like on paper, they’re really, really, really smart. But when he talked to them, they’re dummies, reminds me of our elected officials, and many of our unelected officials. You know, how many lawyers there aren’t Congress? Do you know? Do you know what percentage of Congress are attorneys? How many would you guess? Well, in the House of Representatives, 30% of our elected representatives are attorneys. What do you think about the Senate? Well, that comes in at a whopping 51%. So half the people in the Senate are attorneys. Hmm, huh? Is that good or bad? Well, sometimes they think that Shakespeare was right. Let’s kill all the lawyers. Yeah. It is what it is. All right. So wisdom, versus intelligence, conspiracy theories. Napoleon Hill, the author of Think and Grow Rich famously said that every adversity carries with it the seed of equivalent or greater benefit, in the context of what I want to talk about today, which is the new fiduciary rule that just got thumbs up, got got approved. Every piece of legislation carries with it an unintended consequence. Or maybe maybe unintended consequence. Todd Todd, there’s a lot here to unpack. And I am of course, going to do it extremely skillfully. And somewhat clumsily, really probably depends on your position on the whole thing, how you view it. So this is where we get into the conspiracy theory, part of the conversation, and then I’ll circle back on the unintended consequences, part of the conversation. So new fiduciary rule has been cast. If you’re curious, if you’re curious, I think we’ve all heard about these, let these pieces of legislation or the bills that are 1000s of pages long. And so what I wanted to do instead of just reading somebody else’s summary of of the bill, or whatever it is the rule, like Oh, I’m just gonna go find it myself. Turns out it’s 476 pages. And I really, last night, I was like, Okay, I’m gonna read it. I’m just gonna read it. Make up my own mind about this. So at the best of intentions, which, as you know, the path to hell is lined with good intentions. That I started reading it this morning. I was like, Oh my God, there’s no fun I can weigh, no fucking way that I’m going to make the investment of time and energy required to read this thing. So sorry, not sorry, just is what it is. Instead, I just decided to utilize my critical thinking. So something that many, many, many people among us choose to not do. So on its face fiduciary rule make sense? What does it mean to be a few fiduciary it means that you are obligated to act in the best interests of your clients, you’re legally obligated to act in the best interest of your clients. So why wouldn’t I want the people or person managing my money or giving me advice about my money to be legally obligated to act in my best interest? Of course I would. That makes a lot of sense. So as you do dive into the articles, and the headlines and everything else that has come out over the last 2448 hours about it, here are some, here’s some of the good ones. The Department of Labor has tried to restrain bad actors, relative to two big areas of advice, rollovers from 401k plans, and purchases of insurance products, like annuities. All right. So it’s really what this is, driving at what it’s trying to do is to protect consumers, investors, savers, investors, you and I, from bad actors from getting sold. Unnecessary, or costly insurance products like annuities. Okay. I feel like if you were to read all of the articles, all the summaries, that would be a pretty good one. They want to make sure that you are not moving money out of your 401k and putting it into an insurance product like an annuity type. Pretty simple. And that’s such a good term isn’t that isn’t bad actors. Such a great term. bad actors reminds me of Made for TV movies back in the day, back before every movie was made for TV. There used to be an embarrassing thing for a cinematic Ock actor or actors who would be in films to start a TV movie or Docu drama or whatever drama. Now, it’s obviously not the case. Anyway, the headline goes on to say that conflicts of interest that allow professionals to charge high fees that chip away at savings. Here’s a bottom line for you. Americans rolled over $779 billion they moved rolled over transferred $779 billion out of 401k into IRAs in 2022. So there’s your answer. That’s not the right sound though. Yeah, that’s the better sound. It’s not a ding ding ding ding dang. It’s a cutting of the cash register. That’s it. I love the the all the new Batman movies that have come out I love the Christian Bale Batman movies, I thought that they were awesome. In The Dark Knight Rises. The one in which Bane is is one of the bad guys, one of the bad actors, Bane. He shows up at the stock exchange, the Gotham Stock Exchange, and crashes the party, everything stops. He’s got his, his thugs with them. And he walks into the trading floor and sky this traders like this is a stock exchange, there is no money you can steal. To which Bain replies, then why are you people here? Why are you people here? There’s no money to be stolen. Why are all of you people here working? It’s funny. So as always, with everything else, just follow the money. Show me the money. Show me the monitors. And I don’t mean a roll over here or a roll over there. I mean, all the money. What’s the problem? What’s the real problem here? What is the real problem that our government is trying to address trying to help solve? Is the government truly worried about you and I getting taken advantage of by a bad actor and getting put into an expensive annuity? No, of course it’s not.

The government doesn’t care about that at law. Briefly, just about me, if we can make this about me for a minute, thank you. I spent 14 years working as a financial services professional for life insurance companies, okay. So I was I sold life insurance, I sold annuity products, I sold investment products. Okay, it was great, really enjoyed it worked with helped a lot of people. And I’ve spent the past 10 years as an investment advisor representative working for my own independent investment firm. So I understand a lot about how the financial world works, seen it for both sides for almost 25 years at this point. So big question that immediately comes to mind for me is, if we’re worried about protecting ordinary investors, the average investors, the people who are rolling money out of 401 K’s? What’s the time period that we’re really interested in, that we’re protecting these consumers against bad actors for? Because that’s a critical thing here. Okay, so let’s, since it’s a critical problem, let’s put our critical thinking cap on. If an annuity, these terrible annuities, just briefly about that nothing is is inherently good or bad. Annuities are not good or bad. They’re just a financial product. Divorce, it’s not good or bad. It’s just divorce. Some people think it’s terrible. Some people think it’s the best thing in the world. Some people think annuities are terrible. Some people think that they’re the best thing in the world. So I’m not making a judgement about it. It all depends. But if an annuity carries with it a 4% upfront fee. Well, that’s a lot. And I get it some pay, have a way larger upfront fee, some have way less? Okay, there’s nuance to all of this. So don’t ask me. But another option would be if we’re not going to do that. And I’m not saying you should do that. Another option is simply to roll your money into an IRA, an individual retirement account, that’s not doesn’t have this annuity product component to it. Okay. And you’re working with? In the first example, if you did buy an annuity, you’re probably being sold that annuity by some kind of a financial person. Right? That’s the whole idea here. The whole fiduciary rule is that whoever is working with you, as the consumer or the investor, what are they putting you in? Are they suggesting an annuity product? Or are they suggesting just an IRA. And that’s what this whole thing is working to tackle. And they’re saying the fiduciary rule, in its form right now is saying the annuity is a bad option, just to an IRA. Okay. But the human being the financial person that is helping you put money into the IRA, are they working for free? Are they doing this out of the goodness of their heart? Well, no, of course, they’re not. They’re professional. They get paid to help you make financial decisions in some form or fashion. And sometimes they get paid 1% Every year, on the amount of money that they’re helping you to manage. Not always, sometimes less, sometimes more. I get it. I know. So it’s 4%. More than 1%? Yes, it is. It is. So that’s good. I’d rather pay 1% at 4%, wouldn’t I? Yeah. What about over the course of two years? Well, four is still more. Yep. Checks out. What about four years? Whoo. Well, now it’s not more not now. It’s not more anymore. Now. It’s the same? What about 10 years? Wait. 10 is more than four. You see, with the annuity, you’re paying 4% In the first year. And then you’re not paying that high fee anymore. If you’re paying 1% forever. Now, sometimes there are ongoing fees. Sometimes I think you understand what I’m trying to do in a very simplistic way. Hey, there’s so much nuance here, just like everything else. But I think it’s important to see the forest through the trees on this one. Speaking about that. Let’s get back to talking about what’s really going on here. What’s going on here? What’s the conspiracy theory about the fiduciary rule? From my perspective? What are the largest asset managers in the world? Who are they put another way, who manages and has all that 401k money? Yeah, BlackRock, our buddies over at BlackRock, Vanguard, fidelity, JP Morgan, and State Street. They’ve got so much money they’re getting paid. to manage all that money so, how do you think they feel about Americans? You and I, taking $779 billion in one year away from them? How do you think that that makes them feel? Have you even thought about that? A bit, it makes them feel a little sad. But more so. I bet it makes them kind of mad. Mad enough to do something about it. It’s, it’s fuck around and find out at a different level. Just a whole nother level. BlackRock level, fuck around and find out. Yeah. never wondered to these companies to Blackrock Vanguard State Street. Did they sell annuities? Do these companies sell annuity products? So to satiate my curiosity, I searched, I Googled, does Blackrock sell annuities? And you’re never gonna guess what I found out. Literally, I will link this, but just Google it. Google does Blackrock sell annuities. And here’s what it comes up. This is what it says. Coming soon to a 401k. near you. We’re launching a solution. Life path paycheck combines the simplicity of a target date strategy, with the increased certainty of an annuity from insurers selected by Blackrock to offer participants a paycheck for life. You can’t make this shit up. I’m going to read that again. Does Blackrock sell annuities coming soon to a 401k? near you, we’re launching a solution. Life path play paycheck combines the simplicity of a target date strategy, with the increased certainty of an annuity from insurers selected by Blackrock to offer participants a paycheck for life. I see what’s happening here. So they don’t want you to move your money into some other company’s annuity. They want you to leave your money, right where it is. And to put it into an annuity from a company they select. Got it. Annuities offered by good actors, not those bad actors. You just cannot make this up. It’s such a classic rules for the but not for me. Who is this really helping? Who is this really helping and protecting? Aside from the largest asset managers in the world? I can see how it’s helping them. I can see how it directly benefits them. I don’t know that it helps ordinary investors. Here are some facts, about 401k balances the United States and I want to share these just because these are the people that are rolling their money out that need protection from bad actors remember, so what are what are the median balances? This is by from CNN. So I’m not just pulling this out of thin air. I might be pulling it from a crappy Media Network network, but it’s not I’m not making it up. Could CNN be making it up? Well, that’s a whole nother conspiracy theory, perhaps for another little for another day or another letter. So median 401 K balances. For investors 25 to 35. It’s around 11 grand. That’s the median 401k balance for investors 35 to 44. It’s around 28 grand 45 to 50 for around 48 grand, or 55 to 64. Around $71,000. Are those numbers attractive to BlackRock? No, they have no designs on giving financial advice to a 30 year old with 11 grand. Don’t believe me? Try it. See how much time and attention you’ll get from a financial advisor at a big Wall Street firm with 11 grand to invest. You won’t get the time of day from them. But they love you when you’re a nameless, faceless participant in a 401k that just pumps money in month after month then moves that money into their preferred annuity partner when it comes time for you to retire. Just don’t show up at their office looking for personalized attention in the meantime. And that’s the unintended consequence from my perspective.

So, but he think, too far out over my skis. Hmm, I don’t know. Connecting the Dots. It seems pretty clear And it was just so funny. So funny when I Googled, does Blackrock sell annuities and then just pops up. Unbelievable. So here’s some, here’s some other stuff that I noticed going back to this unintended consequences that something like 80% of people are never gonna interface or talk to a financial adviser is that good or bad? I don’t know if that’s good or bad. It just kind of is, it just kind of is that I know, over the 14 years that I spent working as a financial services professional and training and developing people who were also becoming or learning how to become a financial services professional that I worked with and interact with 1000s of people. So many people, and many of these people, they would buy life insurance policies, they buy term insurance, we’re talking $20 a month term policies 50 bucks a month. And because I made a commission on that, it was worthwhile. So when I sat down with these people, we did a full needs analysis, call it a fact finder, and just talked about, what what do you have? What is it that you want? So where are you? Where do you want to go? Here’s how we close that gap. So in all these scenarios, which are literally countless, they got a full needs analysis, they got to learn how to put a household budget together, they got the right amount of life insurance, and they learned about how much they needed to be saving in order to meet those goals. It’s not rocket science. But we presented through just software programs, all of their needs. So if they wanted to buy a house, we help them figure out here’s how much you need to save. You want to help you kids with college, here’s how much you need to be saving now for 18 years from now. So they have this much money. You want to be able to retire 25 year old 35 year old Okay, well over the next 4030 or 40 years, you need to be saving this much. Is that valuable? Is that a value? Yeah. That’s immensely valuable. Is it simplistic maybe. But financial planning, it’s so overblown. So overcomplicated, those are the fundamentals. And because I was making money on the sale of an insurance policy, which they needed, I could help them and afford to spend time doing all this other things as well. So bad. Now, that is a win win. That is that is a value, transaction. I made money, they got the things that they needed. They got the things that they wanted, which they weren’t going to get from some fancy financial person. So anyway, unintended consequences. None of it’s right or wrong. There’s so much nuance in each situation, blah, blah, blah, blah, blah, blah, blah. You’re smart, you get it. So worst case scenario, I see nefarious intent from bad actors on Wall Street that was motivating behind putting in place this new fiduciary rule. At best. I see short sighted decision making from dumbasses in Washington DC. Either way, buyer beware. As per usual, thanks for the letter Lupita Thanks as always, for listening, watching, checking this out, I’m grateful. As always for the reminder, it’s never going to be anybody, anybody. Anybody more interested in your financial success than you are. So act accordingly. Not even the government. The government’s not even as interested in your financial success as you are even though they’re working so hard to protect you working so hard to protect you from bad actors. All right, I’ll stop