re: Northwestern Mutual - Should I?

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there is little evidence empirical or otherwise that using an investment professional will yield a better outcome.

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I would love to see some full studies on this. Especially to see if they break it down between planner and brokers, which I would assume they do not. Not saying it isn't true, but the fact that over 1/3 of Americans have nothing saved for retirement. Further that with looking at 1990-2010, the average individual investor only got 3.49% compared to the market's 7.81%, i just find it a bit suspect.

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Whole life, universal life, annuities, and other BS instruments are nothing more than smoke screens to hide excessive fees and commissions. Its a shell game that most people can't figure out. The products are sold exploiting individuals fear of the unknown and love for their family.

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Also, the numbers the insurance company give you on market returns vs their returns over time are HIGHLY suspect.

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You have any stats to back this up, or just your assumptions?

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these are the same guys that charged you 6% fee on a fund that sells at ZERO fee to everyone else.

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Huh? Who is buying American Funds (or others like it) for no sales charge?

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Whole life, universal life, annuities, and other BS instruments are nothing more than smoke screens to hide excessive fees and commissions. Its a shell game that most people can't figure out. The products are sold exploiting individuals fear of the unknown and love for their family.

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roll eyes is cute and all, but are you really going to claim that any of the abovementioned products are recommended by more than a handful of people who don't get paid a commission on them

you can roll your eyes all you like, but the VAST majority of unbiased financial experts agree with my view.

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Also, the numbers the insurance company give you on market returns vs their returns over time are HIGHLY suspect.

You have any stats to back this up, or just your assumptions?

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this is an assumption based on the reality that no insurance company or mutual fund is going to advertise time frames in which they did not beat the market...unless they only have data showing their poor performance, or they're morons...so no, I don't have anything to back it up other than common sense

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these are the same guys that charged you 6% fee on a fund that sells at ZERO fee to everyone else.

Huh? Who is buying American Funds for no sales charge?

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My mistake. I didn't realize that all American Funds had near criminal sales charges of from 2.5 - 6%. I thought they had some funds without the outrageous fees. So I'll edit my statement say:

One should NEVER trust anything that comes out of the mouth of a 'financial expert' that advised them to buy a mutual fund that was -6% the day they bought it. You OK with that?

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the point actually being made is that by simply buying and holding a broad based market index ETF, any investor will outperform the vast, vast majority of 'experts' like yourself..this is not an opinion, the is the factual historical record that cannot be disputed

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Well, your argument does not reflect reality therefore it is bogus. It doesn't matter what might happen, it matters what actually happened. The average return is 3-4% in reality. That is what people made, so what the index did was irrelevant.

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you're arguing a point no one has made....the point actually being made is that by simply buying and holding a broad based market index ETF, any investor will outperform the vast, vast majority of 'experts' like yourself..this is not an opinion, the is the factual historical record that cannot be disputed.

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This isn't reality, however. If this actually happened, then there wouldn't be investment advisers.

ETA: I should amend that because there will always be people who would rather not worry about these things, and be willing to pay people to manage it. That won't change. There would just be less in the industry.

As I've already said in this thread, people don't pay an adviser to max gains in the good times, they pay them to minimize losses in the bad times.

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This isn't reality, however. If this actually happened, then there wouldn't be investment advisers.

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UNCLE !

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Whole life, universal life, annuities, and other BS instruments are nothing more than smoke screens to hide excessive fees and commissions. Its a shell game that most people can't figure out. The products are sold exploiting individuals fear of the unknown and love for their family.

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This comment isn't far off the mark. Insurance companies are in it to make money and the above products are better for them than you. You are buying products that provide protection for loss, not great investments. Rarely do the tax advantages make up for the fees.

Annuities are, in my opinion, not good for investors. They are a transference of market risk from an individual to the insurance co for a fee. Long term investment track records always favor the party with market exposure (insurance co) and they are being paid a fee to do it.

Whoever is saying to just index the S&P and go home is just wrong. That may be what is good for you but it certainly doesn't apply to everyone. If you are going to argue that point why not advocate just buying the index in Emerging Markets? It has a higher long term rate of return. Active and passive each can have their place in a portfolio. An average investor can beat the S&P over the long term with proper diversification and active management (this has a lot to do with the disproportionate effect of losses and gains ie it takes a 100% gain to offset a 50% loss).

Most active funds don't beat the S&P every year, nor do they strive to. This is for a vast multitude of reasons. I don't have time to go through them all. The S&P is a cap weighted index with 20% of the investment value in the top ten companies. A top company in the S&P has more value in it the the bottom 100 companies combined. Very few active managers would be that concentrated.

The basic answer is that you should reach your return objectives in the most conservative way possible. That way you don't waste time recreating wealth you already had and you can continue to compound your money. This leads to long term success.

If you want to use a professional there can be a lot of value in the right one. Find someone who is fee only and not a salesman working on commission. Get your insurance elsewhere and get term. Term is pure insurance against the risk of your death, which is what you are using it for in the first place.

Nobody has argued that WL isn't an insurance product. It is that first and foremost.

However, I am curious. What rate of return would make a WL policy worthwhile as part of a portfolio? I've asked this question a multitude of times but never gotten an answer.

It was a completely hypothetical question. You can see no return that would make it a possibility for some people to buy it, instead of saying nobody should ever buy it?

If you are defending that WL is a smoke and mirrors product, is it because of the contractual nature of it or its performance?

Hypothetically speaking, what return would be acceptable to make WL not a smoke and mirrors product? If the notion is that nobody should get it, what would make it so it is acceptable to buy?

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With the current interest rate environment most of the fixed income portfolios of insurance companies are looking at future returns in their fixed income investments in the neighborhood of 2-3%.

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The investment performance of the company is only a 1/3 of what goes into the performance of these products (generally speaking).

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I don't think it is a smoke and mirrors product. I think it is a product that makes sense for some people who have no appetite for risk and are looking for guaranteed returns.

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Well, then I apologize. I took your agreement with the other poster's comments that you quoted as an agreement in his position on the products.

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As the rate of return in the WL policy goes up the rate of return you can achieve outside of the policy does as well so it will always remain a relative relationship.

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No kidding, that has never changed. You can always find an investment to outperform another, however you can also do worse than the WL. My whole reasoning in questioning is every person I get into a discussion about WL always claims it is not worth the money, doesn't perform well enough, etc... That would mean there is a point that performance would justify it. They just never have a point that they think it would.

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In a hypothetical scenario where they were unrelated I would be happy with 8% or better as the guaranteed rate.

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So, if say a policy got 8% after tax over the past 30 years, it would have been worth buying?

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I don't think WL really has to stand on its own as an investment though as there is a value that is relative to each policy purchaser that can't be quantified in the death protection and guaranteed returns

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I agree. This is why I question anyone that says you should never buy WL.

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What are the other 2/3s of the return component?

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Company Expense ratio and Mortality.