A few years ago, Thomas W. Young, CLU, ChFC, saw a movie that reminded him of a situation he experiences as a financial advisor.
In the movie, vampires took over a major city and kidnapped its citizens, continually taking blood from the innocent people to feed themselves.
Why does this matter?
"When you fully understand lost opportunity cost, you can see that our current banking and taxation systems are doing something similar to what the vampires were doing in the movie," said the 25-year MDRT member from Beaver, Pennsylvania, in his 2016 Annual Meeting presentation "The lifetime impact of lost opportunity costs."
It’s important, Young continued, to explain the concept of lost opportunity costs, and how much money clients may lose throughout their lives as a result of inflation, taxes and interest they could have earned on taxes paid. In his presentation, Young talked about the value of dividend-paying whole life insurance, and various ways to use money more efficiently and avoid unnecessary costs. "If you are comparing one money strategy against another and you are not sharing with the client the concept of lost opportunity cost," he said, "the numbers are false, and they will not bear out truth and accuracy."
Hear more in the May episode of MDRT Presents: