Business Innovators Radio - Interview with D. Scott Kenik, Founder and Principal of Wealth Concepts Group & Author of the No Stress Retirement Roadmap

Episode Date: June 9, 2023

I first started in the industry back in 1995. I spent several years educating financial advisors from Merrill Lynch, Morgan Stanley, Prudential, and other national companies on retirement plan design, and I worked for Metropolitan Life helping them launch a new retirement program.There were 2 significant events in my life that led me to my current and most rewarding path of helping families gain financial security.The first was my parents’ retirement problems. They spent much of their retirement taking seminars and learning about investing and they traded their own accounts to supplement their retirement income. As far as I knew they were successful. They never said otherwise.When my dad passed, my mom told me that, in fact, they had lost a lot in the stock market and she was concerned about having enough money to live on. Now they were both smart people and had dedicated a lot of their time to learning about investing. Instead of Mom enjoying her golden years, she pinches every penny hoping that her money will last.The other significant event was the economic crash in 2008 from the mortgage crisis. I watched my retirement account drop like a rock, as did my friends and associates. I knew there had to be a better way.If a No-Stress Retirement is your goal, then we invite you to contact us for a complimentary Wealth Concepts Group consultation.Learn More: https://wealthconceptsgroup.com/ or pick up a copy of Scott’s book “No Stress Retirement Roadmap” https://www.nostressretirementroadmap.com/ALL CONTENT IS FOR INFORMATION PURPOSES ONLY. OPINIONS EXPRESSED HEREIN ARE SOLELY THOSE OF WEALTH CONCEPTS GROUP AND OUR EDITORIAL STAFF. THE MATERIAL PRESENTED IS BELIEVED TO BE FROM RELIABLE SOURCES; HOWEVER, WE MAKE NO REPRESENTATIONS AS TO ITS ACCURACY OR COMPLETENESS. ALL INFORMATION AND IDEAS SHOULD BE DISCUSSED IN DETAIL WITH YOUR INDIVIDUAL ADVISER PRIOR TO IMPLEMENTATION. THE PRESENCE OF THIS WEBSITE SHALL IN NO WAY BE CONSTRUED OR INTERPRETED AS A SOLICITATION TO SELL OR OFFER TO SELL INVESTMENT ADVISORY SERVICES. ANY GUARANTEES REFER TO INSURANCE PRODUCTS AND ARE BACKED BY THE CLAIMS-PAYING ABILITIES OF THE UNDERWRITING COMPANIES.Influential Entrepreneurs with Mike Saundershttps://businessinnovatorsradio.com/influential-entrepreneurs-with-mike-saunders/Source: https://businessinnovatorsradio.com/interview-with-d-scott-kenik-founder-and-principal-of-wealth-concepts-group-author-of-the-no-stress-retirement-roadmap

Welcome to influential entrepreneurs, bringing you interviews with elite business leaders and experts, sharing tips and strategies for elevating your business to the next level. Here's your host, Mike Saunders. Hello and welcome to this episode of Influential Entrepreneurs. This is Mike Saunders, the authority positioning coach. Today we have with us Scott Kenneck, who's the founder and principal of wealth concepts group and the author of the No Stress Retirement Roadmap. Scott, welcome to the program. Thanks for having me, Mike. I appreciate it. Hey, you're welcome. So I want to talk all about your book, No Stress Retirement Roadmap.

And boy, I just love the title because nobody likes stress and everyone wants a roadmap. Tell me the blueprint, the checklist, guide me, right? So all surrounding retirement. So what was the genesis behind the need for this book? I'm certain that you spent many years in the industry saying, boy, people are misinformed about this or people need to understand that. So give us a little bit of background on that. of why you even wrote the book in the first place. Well, that's a good question.

And, you know, when I talk with clients and I've been doing so for years, it's amazing to me that they really have no idea what options are out there. You know, they hear 401Ks, they hear IRAs, they hear the stock market, and they think that's their only option. So they don't know what options are out there, and they don't know about the problems that they can potentially run into, which is really why I wrote the book, gives an overall concept of retirement, the different directions you can go into positives and negatives. Yep, because let's please, you know, make sure people realize that, boy, when you start Googling around any topic these days, but especially financial and retirement topics, you're going to get 437 quadrillion responses back from Google.

So you just get confused and don't know who to trust. So let's talk a little bit about one of your main points that you teach in the book, why the stock market is not a good investment for people heading toward retirement. Well, the stock market is a great place to build your wealth in your working years. The problem with the stock markets highly volatile, lots and ups and downs. And these volatility, these crashes in your later years nearing retirement, can destroy your account balances and destroy your income. In your younger years, the stock market crashes really don't bother. They're not very painful because you don't need the money yet.

You've got a lot more years to retirement and you've got your paycheck to cover all of your financial needs. But when you're nearing retirement in retirement, this volatility, these ups and downs can really destroy your account balance. So when you shift from your working years to your retirement years, you really need to change the way you think about your money. You need to change your goals from accumulation and risk to protection and income. So I think there's much better places for retirement money than in the stock market for people in retirement and during retirement. You know, I like how you've raised that because too many times people will make this categorical, never do this or always do with that.

And you're not saying that the stock market doesn't have its place. It's just it has its place at a certain time. And that is well before you start needing to be making safe investments for retirement. So I know that in your book, in one of the chapters you talk about the greatest wealth killers, I definitely would want to know what's going to kill my wealth. So talk a little bit about about that concept. Well, the four greatest wealth killers are market risk, taxes, high fees, and inflation. And market risk is just what we talked about, the ups and downs of the market. how that can destroy your account balance, the volatility can destroy your account balance in retirement. Taxes, taxes are only going to go in one direction. We're probably most likely in the lowest tax bracket you're ever going to see for the rest of your life. So those of you who have got money in pre-tax plans like 401ks, IRAs, 403Bs, etc. I highly recommend converting those to a Roth and paying the taxes now before taxes go up. So you're paying taxes at the

lower tax bracket. Fees are also a very, very important concern. You know, a lot of, your average mutual fund is about 1.4%. Your average broker fee is about 1%. It doesn't sound like a whole lot, but multiply that by 30 years. So now all of a sudden you're paying 30% in fees. So reducing your fees is tremendously important. Another thing is inflation. You know, a lot of people say, yeah, I can afford to retire, but they don't think about what inflation is going to do, 20 years from now, and can they afford to stay retired? Because with the average inflation of, you know, three and a quarter percent, prices are going to double in about 20 years. Right now, we're in hyperinflation. This continued prices are going to double in seven years, nine years.

So we need to consider inflation for our long-term income plan, make sure we've got enough money to retire now and stay retired in the future. You know, those are points that if we were to drill in deep on those, it would be probably a three-hour workshop on each and every one of those. So I'm glad that you go with those details in the book. So most definitely those give us the 30,000 foot overview of, yeah, that does make sense. I hear about inflation on the news all the time. I don't know how it impacts me, but I definitely need to know more.

So I know that one thing that people need to keep in mind is that many times they think retirement is like, you know, fluffy blue skies and clouds and rainbows and perfection. but a lot of times retirement is going to cost more than they expect. So talk a little bit about that and then how that relates to making sure that they make those safe money options to get guaranteed income and competitive returns at the same time. Yeah, I like to tell people that retirement most often will cost more than people expect. I ask them to put together a monthly budget. You know, what are you paying for your mortgage if you still have your taxes, your gasoline,

your electric, your insurance, your clothes, your food, et cetera, and come up with a monthly budget. But what people have to understand is in your working years, you're working five days a week. You're earning money five days a week and you're spending money two days a week. That all changes in retirement. You no longer have an income unless you've got a pension of something like that. And instead of earning five days and spending two days, you're going to be spending money seven days a week because there's just so much you can watch TV and tend to yard. So you're going to go out and do things. And even if what you're going to go out and do is free, you still got to pay for the gas and possibly lunch while you're out there.

So when you start adding in the RV trips, the golf trips, the boating trips, the vacations, all that stuff is retirement costs add up tremendously. So you really need to make sure that you're accounting for all of that. So once you do finally come up with a budget and figure out how much money you need, you need to make sure that that income is steady and guaranteed. If all of your money is the stock market, you're taking out X number of dollars every month, what happens if you get a stock market crash and your account balance gets cut, half. Can you still afford to retire? Can you afford to stay retired? So I always recommend when you're in

retirement, come up with a budget and fill the gap between your income and your needs with guaranteed lifetime income that it will never run dry even when the stock market crashes. You know, I know that's a whole section in your book talking about fill the gap income, but I like how you laid it out there because when we realized retirement, it might entail, you know, not really cost more than we expect, but just entail more things because like you just clearly laid out like, oh, well, normally we're spending money this many days a week, but in retirement, we've got all the days to spend or do or travel or take up new hobbies or start that, you know, non-profit kind of work. So there's all those things that maybe we didn't

consider, but once we consider that and then look at the income we have, many times there's could be a gap. Well, how do you close that gap? And you have to recognize that you need to have that low risk and low volatility. So I love how you talk about, you know, closing it with guaranteed type thing. So talk a little bit about guaranteed interest contracts because people like to have that warm and fuzzy of guarantee. And also the word contract kind of connotates, you know, it's, it's something that is a legally binding contract. So how does that work together? And it is a contract. It is not an investment.

In investments you lose money, the contracts you can't lose money. So the programs that I like to use are interest contracts. They're either going to do one of a couple of things, depending on the client's needs and goals. One is a guaranteed flat rate payment. No matter what happens, you're going to get a guaranteed payment. The other is a payment based on the performance of the stock market without investing in the stock market. We use the stock market to calculate your earnings, but the big advantage, because this is a contract and not invested in the market.

When the stock market crashes, you don't lose a penny. So you get to participate in the gains of the market without the risk. Love that. It just makes you feel comfortable that, okay, I can't have the risk because I'm too close to retirement. And I know that the market does great things. I see the news, but I don't want the volatility. So if you can have an instrument that tracks kind of the movement of the stock

market without having any of the downside or the risk, that's something I want to know more about for sure. And then, you know, you talk, once you get that dialed in, you talk about the next section in your book, traditional retirement strategies and how to make the most of them. And you mentioned just in passing briefly in one of your comments a second ago about a Roth conversion. So I know that your chapter talks about the fallacy of pre-tax investing. And then you mentioned Roth conversions. So tie that together with why you need to think about, you know, taking it on the chin now and pay taxes now so that when taxes go up in the future, you're not taking it as a hit in the future. You brought up a couple topics. One is the fallacy of pre-tax investing.

Pre-tax investing means that you're not paying taxes on the money and money's going in tax-free, pre-tax, excuse me, and all the money's coming out is taxable. Compare that to an after-taxing. program where you pay the tax money ahead of time and then the money comes out tax free. There's absolutely no advantage to the pre-tax. If you figure out, let's say you put in $1,000 and let that money grow, you're now going to have to pay the tax on the higher amount versus you put in, say, 700, pay the taxes on that thousand, only put in 750 and it comes out tax free. If you actually do the math, 20 years later, the numbers are identical, absolutely

identical, but the disadvantage of the pre-tax investing, if taxes go up in 10 of 15 years, you're now going to be paying more taxes in the future when that money comes out. In terms of the Roth... Go ahead, Mike. I was just going to say, I was just going to put a circle in your minds. I look at the word if, I F, and circle that. Because embolded it and underlined it. And I would say, cross through that with a red pen and then write when.

Because you and me cannot guarantee if. and when taxes go up. But I think that a lot of times people can can really resonate with the example I've heard given many, many, many times. How do we know taxes will go up? Well, there's this little thing called the deficit that we have, which is really the debt that the government has on the government, on our, the U.S. economy. And so in the good trillions, trillions that we have in the deficit, how are they going to close that? Cut spending? Well, what's the chance of that going to happen? Little to none, right? So then how do that? you close the gap, raise taxes. So in the next 5, 10, 15, 20 years, do you think,

truthfully, that taxes will go up to close the gap in the deficit? And if you're a pre-retiree, probably you're nod in your head going, yeah, it's probably going to go up. So I think that makes your point there. Wouldn't it be better to take it on the chin now, pay taxes now, so that as the money grows, you don't pay taxes on the back end. Exactly. That's why I say that you're better off paying these taxes while taxes are low because we're most likely in the lowest tax bracket we're ever going to see for the rest of our lives. Yes. So you were getting ready to talk about that next strategy about like a Roth conversion. Yeah.

So the advantage of the Roth is we do exactly what we talked about a second ago is we pay the taxes now and all of the money comes out tax free. So if you've got an IRA instead of letting the interest grow and pay tax, later when taxes are higher, we're going to convert that to a Roth now. So pay the taxes now and all the money comes out tax free. All the money goes to your airs tax free and you're eliminating the required minimum distributions on the RAs and 401Ks and other qualified plans. When you do that, are you taking it all out in one chunk and paying a bunch of taxes? Are you going to do it in layers? I was just going to add that. You can do either way. You could take all of the money converted at once.

What you need to be very, very careful about is your tax bracket. Any monies that you convert from your qualified plan to a Roth counts as ordinary income. And you want to make sure the increasing ordinary income doesn't jump your tax bracket. So most people will do it partial. We go on partial Roth conversions. So each year they'll convert $10, $20, $30,000, rather than convert the entire amount so we don't increase the tax bracket. because not only are we increasing the tax bracket on the taxes you're going to pay in the conversion, you can increase the taxes that you pay on all of your annual income.

You know, that makes a lot of sense because I remember for me way back in the day, about 15 years ago, I was in the mortgage industry. And back in those days when you could make a lot of money in the mortgage industry, you would have a month where you'd make this monstrous commission check and it would be huge. Well, the calculator, the IRS calculator would assume that you're going to make that every single pay period. every two weeks or whatever the pay period is. And then you're getting whacked with taxes. So the strategy was go to your HR department and adjust your W-4 withholding so that it shows more dependents. And all this is talk to your tax accountant. But this is just an example of what I

used to do. And it would be like, okay, we're going to adjust it this much. So you're taking out as little as possible on these paycheck so that at the end of the year, when it all levels out, then you've retained more in your paycheck. And then you're still going to pay your taxes at the end of the year. That resonates with me because what you just said is if you take out and do that conversion in one whack, it might trigger this one big income for that period and you're going to pay more taxes right this minute, whereas if you're going to do it sequentially over time, you're going to keep it down as much as possible. Exactly. And most of my clients are doing this, like I said, I're doing it over five, even 10 years. So they're not increasing that tax bracket.

So get with someone like yourself, get with a CPA that's going to run. these numbers to make sure that the progression is going to work in your favor. So huge, huge concept. And it makes sense. I've heard it even said, I'm sure you've said these words, but you know, you want to pay taxes on the seed, not the harvest. So get that plan in place, get that conversion going so that when you have these runway of years before retirement, now the money is growing in that Roth. And then at the end, you take it out. You've already paid the taxes. You're good to go. Exactly. And it's not just during the runway to retirement. you're in retirement as well. It's a great option because, like I said, you know, taxes,

you know, it's still going to go up potentially in five years. The money comes out tax-free, and it goes to your air is tax-free. So whether you're 60 or 70, it still makes financial sense for most people. Well, you know, also coming, I'm the consumer listening to you going, you know, here's something that I've heard or here's something that I've read. People these days are taking better care of themselves. They're working out more. They're living a better lifestyle. They're eating better. All of these things. And you're going to live longer. So maybe the age you had in your mind of, oh, retirement, or I need to have money last for this many years because I retire here and I need it to last this long, that might have expanded

out. So you may have more years in retirement to make sure your money last, but also for that runway of, you know, the tax bracket like you just mentioned. So that's a big point for people to keep in mind. Also, we got medical advances, new medicines, new surgeries and all that to extend people's life. You know, one of the things that could be very, very devastating is not having enough money to stay retired. You know, that's when you end up getting a job when you're 75, 80 years old, not in most people's plans. 100%. And, you know, I know we've touched on this before,

but the internet is not your friend. You know, Google should not be your advisor. So when you start Googling around these topics, you can just get discombobulated 10 ways to Tuesday. But one of the things that I know that you then also mention is let's kind of build this mode around yourselves with some properly structured life insurance. And I know that people hear the life insurance word and their red flags go up or they go to Google, but talk a little bit about your strategy of using life insurance as a financial tool. You know, most people don't understand the tremendous benefits that life insurance has as a financial tool. They just think of it as a death benefit. But we've got some very unique benefits that only life insurance offers. Number one,

we can eliminate market risk. These contracts will pay you interest, like I said earlier, based on the performance of the market, without any market risk. You'll never lose money. And all of the money comes out tax-free. It is a giant Roth. Think of it as a giant Roth. Right now, we've got income limits. If you earn a certain amount of money, you cannot contribute at all to a Roth, and we also have contribution limits that you can only put in so many dollars per year. With using the insurance as a financial tool, we can convert as much money, excuse me not convert, but use as much money in this program to create this giant Roth. So we're eliminating the stock market risks.

All of the money comes out tax free, and here's the secret sauce that most people don't understand. With a properly designed plan, you can actually borrow money from the plan and still get paid interest on the money you borrow. Let that sink in. You can still borrow money and get paid interest on the money that you borrow. So that's interesting because if I have, let's just say, $250,000 in an interest-bearing account, some kind of an account out there, then my interest is being calculated on that $250,000. But if I take $100,000 out, now the interest is calculated on $150,000.

not 250. You're saying through this strategy, if you have that 250 in there, you can access that amount of money, 150, 200,000, and the interest calculation is still on that original face value. Yes, because when you borrow from this life insurance policy, you're not borrowing from your account. You're actually borrowing from the insurance company. In most cases, the vast majority of years, the amount of money that the insurance company will pay you in interest is higher than the cost. of the loan. So you're earning the difference between the interest they're paying you and the cost of the loan, which is called the arbitrage. You're earning that difference for the rest of your life on money you borrowed. Imagine going to your bank, Mike, and saying, I want to borrow $100,000, and I want you to pay me interest.

And that's exactly what we can do with these life insurance programs. And this is an unknown benefit that most people have no ideas available. and it is what makes a specialized form of life insurance some of the, one of the best financial tools available. And using that word arbitrage, you know, is there a requirement to even make payments back to your own policy? There is not. You can if you want to, but in most cases, these loans are not paid back while you're

alive. They're basically borrowing from your death benefit. So it would come off of the death benefit when you pass. And when we put together a proposal and all the numbers, all of that is calculated in. That's a really interesting point there because, A, what you just said is your interest calculation, the cash value growth in that instrument is off of the principal face value, even if you access it through one of these loans. And then anytime I hear the word loan, I think of debt, borrow, pressure, stress, I've got to make a payment. and you're saying if you set it up the right way and you put all the pieces in the right way, you don't even need to make a payment back to it because it's really pulling it out of your death benefit

so that at the end of the time when you needed to access it due to death, they're just going to take that loan off of that, but yet you access the money during while you're alive. That's a really powerful thought that I'm sure people don't even understand is available. And most people don't. That's why I put a whole chapter. in the book about it. What you need to understand is these particular insurance policies are specialized policies designed

for financial growth, not just the death benefit. So the death benefit icon is kind of like icing on the cake, so to speak. The reason that you'd get this is the financial tool, the services, the benefits that these offer, that nothing else comes close. So you've got the cash value, the growth, dividend, growth, things like that. and then the borrowing like you just mentioned. And I like the way that you phrase the, it's not just a death benefit because the old term life kind of policies,

they only trigger and pay when there's a death. But if you don't die, they don't pay out. Well, that's like having car insurance. And if you didn't have a wreck, well, you don't get anything for that. But in this scenario, talk a little bit about some of the more benefits you get while you're alive. So yes, the cash value growth. Yes, the borrowing.

aspect if you needed it. What's another living benefit that would be available to people? In addition to your traditional death benefit and lease loans I just talked about, we have what we call living benefit. So if you get sick, you can get a portion of your death benefit while you're alive to take care of your bills and take care of your family while you're still alive. 70% of bankruptcies in this country are due to medical expenses. And the problem is when somebody gets sick, they can't work. They lose their income. And very often the spouse has to take care of them and their income drops. So having the ability to get this money while you're alive is a tremendous financial benefit

to the family. And, you know, we talked about being able to borrow loans and things from the program. And one of the tools that we use this for is college planning. And the reason we, it's such a great tool for college planning is we know well ahead of time that we've got to build. We know it's going to be a big bill. We can pretty much guesstimate very close how much that's going to cost. and we can plan on taking that money out when we need to.

So let's say our kids are 12, 13, 10 years old, early you start to better. We start putting money in. It's not only going to be used as loans to pay for college, but also the money will be out available for us at retirement. So let's say we put money in and we borrow $100,000 for college to pay off the college bills after our college loans are done. We're going to continue to get paid interest on that $100,000 that we borrow. for college for the rest of our lives through this arbitrage that I just mentioned.

So all of the money that we're borrowing, we're eventually going to get back in interest. So this $100,000 may not cost you a penny because you're going to get that back in interest in retirement. You know, I've heard this concept called become your own banker, but that almost is a fallacy because your banker isn't going to pay you to take money from them like you were saying earlier. So it's like becoming your own banker 3.0 kind of a concept in my opinion. Yeah, it's a very, very powerful tool. The early you start the program in your life and your kids, if you're planning on use the college.

I wish everyone would start it when the kids are in first grade. Even if the kids are in 10th grade, 11th grade, we can use this program. So this life insurance is a very, very powerful financial tool. Like I said, most people don't understand. And also, this is going to sound new to people, but it's not like some new concept. Isn't it true that this concept of these types of insurance contracts has been around for almost 100 years. They have been.

They've been around for this particular type of kinds I've been around for many, many decades, but people don't know about it. This is not something you buy from your local life insurance agency that sells you a homeowner's insurance and car insurance and all that stuff. You need to work with a retirement and a college planning professional that understands

how these plans work. You know, some of your local generic agents may offer them, but they truly don't understand them. You need to work with a financial professional, not a typical insurance agent. Yeah, that's a good point because even if a typical insurance agent said, oh yeah, yeah, yeah, I've heard of that before. I can do that because we have permanent life insurance just like that. It needs to be properly structured and set up the exact right way so that you can get those living benefits and the borrowing aspects like you I mentioned, it's not just a cookie cutter template. So I think that that's a big point that people

need to hear is you need to work with someone like Scott who already knows how to properly set these up. Exactly. You need a financial plan or not your typical generic insurance agent. Well, I'll tell you, Scott, this has been really eye-opening, really clear and concise. I just love how you are laying this out so that people can actually get that no-stress retirement and have a roadmap to follow. So thank you so much for coming on. What's the best way that someone can learn more and get a copy of your book? All they have to do is get a hold of us through Wealth Concepts Group.com or they could give us a call at 832-870-5560. Well, Scott, thank you so much for coming on. It's been a real pleasure talking with you. Appreciate you having me. Thanks so much, Mike. You've been listening to

influential entrepreneurs with Mike Saunders to learn more about the resources. is mentioned on today's show or listen to past episodes, visit www. www. www. influential entrepreneurs radio.com.