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Infinite Banking = Infinite BS  Thumbnail

Infinite Banking = Infinite BS

Posted by John Posey

Have you ever heard of a concept called Infinite Banking or Be Your Own Banker (BYOB)? You might need to “bring your own [adult] beverage” to tolerate this topic – I know I do! In short, do not burn many calories in trying to understand it because I think it’s often overhyped as a get-rich scheme and overall a bad idea.

Here’s the quick version summary – you buy a whole life policy to accumulate cash value that you can have the pleasure to borrow against. You then can borrow against the policy values in the future and effectively become your own banker – let the infinite banking and hopefully just the temporary misery begin! I can just imagine the costs of insurance and lost time value of money already. It’s painful to consider how many might be buying into this idea without understanding it in the least.

Rick Kahler, Rapid City, SD financial planner and author, composed a good summary of the concept here, BYOB? Don’t Join This Party.

I feel compelled to share this because I stumbled across someone suggesting this strategy to farmers through a book and podcast in the past year. Additionally, I recently attended an education webinar targeted to financial advisors where one of the “educators” offering the course was supposedly a 24-year-old running a 7-figure advisory practice (i.e. – registered investment advisor) with just a couple of years in business. Furthermore, he claimed to operate a successful marketing firm for financial advisors - with all the answers of course. As you can probably imagine, I found nearly all of the claims unsupported after some investigation. The 24-year-old (probably still on his parents' health insurance) is peddling the Infinite Banking concept and bragging about industry awards in addition to buying a Tesla with his BYOB strategy on YouTube. I’m pretty sure his unsuspecting victims paid for the Tesla. Conveniently, only the awards and accolades were mentioned – not the fact that he peddles the BYOB strategy. I had to figure that out for myself. His business approach was described as he merely “believes in insurance” as it was presented to a group of financial advisors.  Furthermore, he is not securities licensed or credentialed in any manner. The 7-figure advisory practice mentioned was established – drumroll please – less than two weeks prior to the webinar! I was able to discover this info through an IARD search.  His “team” is doing all the product placement and he just spreads the Infinite BS message - fitting nicely into a fly-by-night business plan.  

The only good news is guys like this keep guys like me employed – that’s the only silver lining I can come up with. If you’re ever pitched Infinite Banking or Be Your Own Banker, run the other way.

Advisory services offered through Plains Advisory LLC, an investment adviser registered with the State of Nebraska. Insurance products and services are offered and sold separately through John Posey, a licensed insurance agent. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Any information provided is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal, tax, financial or investing advice and cannot be used to avoid tax penalties or to promote, market, or recommend any plan or arrangement. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness.  All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.