4.18 | What's Getting in the Way of Your Wealth with Claire Skinner
>> Isha Vela: Welcome to Devotional Anarchy, a podcast about intimate, embodied leadership that is radically human, honest af, and thereby inherently disruptive to systems of disempowerment and disconnection. I’m Isha Vela, trauma psychologist, certified somatic practitioner, wealth wizard, licensed financial professional, leadership coach, and intuitive business mentor. You’re here because, you know, self intimacy and self knowledge is the source of everything you want to create in your life. And that building safety and trust in your body is what allows you to fully own and store your energy in the direction of your desires. This season, get ready for deep dives into wealth building spirituality, emotional leadership, and human centered business with an activist twist. The conversations and tools shared in this podcast are your permission slip to manifest a life and business that lights your soul on fire and supports collective liberation.
This is a conversation with my financial advisor and trainer, Claire Skinner
This is a very special episode I’m sharing with you because it’s a conversation with my financial advisor and trainer, Claire Skinner. And it was her approach to financial planning that got me into this business because it was just so sexy and it felt so safe and professionally speaking. Claire is a non captive investment advisor representative and registered representative with Transamerica financial advisors. And she transitioned 18 years of experience in retail and Internet sales, finance management, sales management and corporate training experience in the automotive industry to a career in financial services. And there are a lot of things that make Claire special, but one of them is her fervent belief in financial education empowerment, especially around rectifying inequalities and building generational wealth in communities that have been ignored by the traditional financial services industry. And the other thing that makes Claire super special is her generosity. Like, it is out of this world. I’m so lucky to have her as my trainer. But in this conversation, we talk about the things that get in the way of getting financially educated, creating a plan, advocating for yourself. So, the psychological pieces, well, we also bring you some educational pieces, some practical parts. We help you, for example, think, big picture about investing so that you can win in the markets, even if you’re someone who is not excited about the money system. So in this conversation, we keep it really real, like always. So pull up a seat, grab your tea, and let’s dive in together. We haven’t even started talking, and I have, like, a big smile on my face. Cause it’s gonna be so good. Yeah. Thank you for doing this and for, like, taking time out of your busy schedule to be here and just, like, talk about the stuff that people don’t really have access to. And I know that you’re all about access. You’re all about, like, disseminating information and empowering people with that information. So, yeah, so excited for the people who are listening right now.
>> Claire Skinner: I’m excited to be here. Thank you so much for having me. It’s just an honor to be able to have the conversation and to be asked to have the conversation. So thank you, isha.
>> Isha Vela: Yeah. So I really want to use this time to cut through so much of the contradictory advice that is out there from, you know, the well known financial gurus. and really looking into some of the secrets, some of the secrets of the wealthy, some of the ways to use life insurance in particular, to grow money, to protect money. The stuff that just really speaking to the objections people have or the stereotypes people have.
Let’s talk about what keeps people from getting started in investing
>> Isha Vela: Let’s talk about what keeps people from getting started in investing. What are the fears that come up for people?
>> Isha Vela: And what is the impact of the delay when people don’t invest? Like, what happens? Because I know you’re big on that, huge on that.
>> Claire Skinner: A, huge on that. I mean, I think for a lot of people, you know, it’s. It’s, first of all, life, it happens. Yes. And it’s just natural when life is happening for us to put things on the back burner, and namely, what we usually end up putting on the back burner is ourselves. Right. Yes. We, you know, pay all, you know, pay all the debts. We’re, you know, doing things for our kids, we’re, you know, doing things for the household. And, you know, a lot of times what ends up happening when you’re not really kind of understanding the number one rule that the wealthy understand, which is that they literally will always pay themselves first. Like, they’re their first bill that they pay. Right. This stock work for them. and what I will tell you is that’s really, like, I think one of the more important things is really, like, scheduling yourself at the top of the pay. Right. And the reason you want to do that is because you really are not going to have the opportunity to build any level of wealth unless, like, you understand compound interest and, like, compound interest. And, you know, the rule of 72 is really the most important, I think, rule you want to understand if you’re going to talk about building wealth. And the only way that that works is if you allow time to do its work. Right. Limited amounts of time. But if you don’t literally build this muscle of paying yourself first, being patient and letting your wealth actually work for you, letting your money work for you through time and through, like, getting a decent amount of interest on your money. There’s no, you’re going to accumulate wealth. So one of the things people do all the time, and I know you’ve heard this isha, I hear this is, oh my God, I have all of this debt. You know, I need to pay this debt off first and then I’ll say, yes, yes. That’s super understandable, right? Like, no one wants the anchor around their neck of debt. Your debt off. That’s something you want to do. But what I will tell you is that with, whatever it is that you’re paying towards your debt, still find a little money to put aside for yourself and pay your debts. Like, that’s the most important thing, because if you don’t, you’re just going to keep on repeating this cycle because the reason you might be in debt is because you had an emergency come up. Right, right. There’s always something, there’s always something that comes up. Have, you know, a safety net. If you have a, you know, a little emergency fund that you put aside, then that can keep you from repeating that cycle of going into debt. Right. debt is obviously like a huge, huge enemy to your wealth, but you really kind of want to be going at both of those things at the same time. Right? Yeah.
>> Isha Vela: And I think that it’s something that’s, that’s something that often gets in the way for people is thinking that they need to have like some lump sum available to invest. That’s a huge barrier for people. Like, just like a mental barrier. And it’s like, no, you can like, put $50 somewhere, right? Like, yeah, and just start small, but start, start doing it. Start, like you said, building that muscle of consistency and just doing like, the repetitive, boring things that often get underestimated that wealthy people do.
>> Claire Skinner: Yeah, yeah. No, I mean, you could be shocked, literally, like that $50 that you’re putting aside that will build up. Like, you will be shocked at what it builds up to. And a lot of times, you know, people are like, well, dollar 50, that’s not going to be anything. Well, it will be a lot harder if you’re doing it in a traditional savings account. Right? If we’re doing, like a traditional savings account, a traditional bank, I don’t want to throw any names out there, but we all see them every single day. If they’re paying you 0.010.030 .0 nothing, then it’ll be a lot harder. Yes. but you know, if you are putting aside $50 a month and you’re doing it in a high yield savings account where you’re making, you know, 4%, 5% interest that can build up to be easily a few thousand dollars. Right. Over a couple of years. And it’s just starting that muscle, building that muscle and it just, that in itself, I think, psychologically starts to make you feel good. Like you’re putting aside something for yourself. Right. if you can put it on, like, an auto deposit, even better, so that you don’t have to think about it. It’s just a muscle and it just goes. Right. and there’s so many things that we might spend money on that, like, we don’t even think about. Right. Like, if you’re doing doordash or, you know, you’re going to the store and just buying, like, I don’t know, like cosmetics or whatever it is, right. That that kind of, some of that money sometimes goes and we don’t know where it’s going, but it’s happening because we’re not, like, paying attention to it.
>> Isha Vela: Yes.
>> Claire Skinner: You really almost want to put your money in a mode where that paying yourself is you not paying attention to it. Like, literally, like, if I can have that automatically deducted from my account and I know it’s trickling and I even forget that it’s happening, you want to put yourself in that mode. And for some people, that might be their 401K, right. That might be your way of paying yourself first. And that’s okay, too, as long as you’re actually doing it. as long as you’re, like, you’re doing something that regularly is going to be paying you, that already puts you well ahead of the game. Yeah, I think you’re 1000% right. A lot of times people do think that you have to, like, start saving, you know, larger sums of money. And that is, again, a big, big mistake to think that way. And I think the financial industry as a whole has gotten people thinking that way just because most of the time, just to even get advice on what to do with your money, most of these companies will not talk to you unless you do have lump sums of money to put away.
>> Isha Vela: Right, exactly, exactly. So we’ve been trained to think about, like, yes, even seeing a financial advisor, it’s like, well, I don’t have any money, but it’s like, you can start that small.
>> Claire Skinner: Yeah, you can start that small. You can absolutely start that small. There’s all sorts of even robo investors that will allow you to save, like, you know, $10, $10 a month into an account, you know, so you can start really, really small. It doesn’t have to be a lump sum.
>> Isha Vela: Yeah, yeah.
When people buy cash value life insurance, they think about premiums as payments
And the other, the other piece that I was thinking about, like, you know, when I, when I see my, you know, my, my insurance premiums, right, because of cash value life insurance, when I see those premiums coming out of my account, like, I feel really good. Like it is a chunk of money and I feel really good when it’s leaving my account because I know where it’s going. It is for me, it’s like, yes, there is a subtraction happening into my, in my account, but the subtraction is an addition to my future self.
>> Claire Skinner: It really, really is. Right? Yeah. It’s like, it is one of those things that it’s going to. It feels like a subtraction upfront, but it’s really going to pay over, over and over, you know, and grow and be tax free, you know? and that’s, that’s going to be huge, you know, at the end.
>> Isha Vela: And I think some people think of it as like, you know, especially when we’re talking about cash value life insurance, which we’re going to talk about more in a minute, people think about these premiums as payments, right? They think that they’re paying the insurance company, but really, yes, there is a portion of that payment that’s going towards the cost of the insurance, but then there is what you are putting in for yourself. And it’s like, I don’t think of it as a payment, I think of it as like paying myself. Right. That’s exactly what we’re talking about when we talk about paying ourselves first.
>> Claire Skinner: That’s exactly what you’re talking about. And really, the bigger portion of what you’re paying into that is going to paying yourself, you know, properly designed policy. And I know yours is properly designed, Isha. Properly designed policy. Literally a fraction of what you’re putting into the policy is going to cost of insurance.
>> Claire Skinner: You know, that means that the bigger bulk of that money is being put to work for you, for your future, you know. and I guess for me, again, the beauty about that is you’re not having to wait necessarily until retirement to access that money. If you needed to access that money, you could absolutely access it much sooner than you could in a lot of other accounts. But you have, again, a nest egg that you’re putting aside for the future that can be used for, obviously, retirement, for long term care needs, for building generational wealth for your family. So there’s so many different purposes that you’re kind of putting that money aside for. For sure. Yeah.
75% of Fortune 500 CEOs have a cash value life insurance policy
>> Isha Vela: and so when we think about, you know, when we talk about cash value life insurance, or iuls index, universal life, or even, you know, they’re called financial pocket knives and super roths, why is it that. Why is it that people are so suspicious of, like, the fact that you have access to market gains, but you have protection from market losses? When I heard that the first time, I was like, what? How is this possible?
>> Claire Skinner: Yeah.
>> Isha Vela: So I would just love for you to share, like, why is that. Why is it that life insurance companies can do that? And why is it that we don’t know very much about it?
>> Claire Skinner: I mean, there’s a. So there’s a few reasons behind that. And, you know what I’ll tell you is that insurance companies, right, are still a part of the traditional financial industry.
>> Isha Vela: Yeah.
>> Claire Skinner: Right. And if you’re kind of just even looking at some of these guides, right, with some of these major insurance companies, they will tell you that their target market is the affluent or the emerging affluent, or, you know, high income executives. So when you’re, like, looking at who they internally market to, they’re not marketing to you, me, the average Joe. They’re marketing to specific clientele. clientele. They usually will know all about it, right? 75% of Fortune 500 CEO’s having a cash value life insurance policy. Right? So they understand it very, very well. When you haven’t heard of it, it’s literally because it wasn’t necessarily designed for us, but it can be used by anybody.
>> Isha Vela: Right?
>> Claire Skinner: Yes. So even though, like, you have, you, know, I know of one of the major companies. Their average index, universal Life premium is over $4,000 a month. Most people are not able to put $4,000 a month into their cash value life insurance. Right. That’s just a common fact. But that’s their average. So that tells you, again, who their target market is, however, right. Anyone can get the policies. Anyone can take advantage of all of the benefits. And again, just because it hasn’t been marketed to us doesn’t mean that it’s not for us. Right. So I think that’s the biggest thing. And these policies are also not policies that you can just go online and, like, apply for. Right.
>> Isha Vela: You can’t just get them.
>> Claire Skinner: You just can’t get them. You do have to work with a financial professional, you know, an insurance specialist, a financial advisor, someone that is aware of how the product works in order to be able to use it, right. So, again, it’s not something that the general public has been very like, made well aware of on just a, ah, broad basis. But these policies, I mean, insurance, obviously one of the oldest financial instruments in the world, literally been around for thousands of years. And it’s evolved, you know, dramatically. But specifically, the index universal life policy has been around since 1999. So you have over, you literally have 25 years of history. And literally since it’s been around, that market’s grown 20% every year, year over year. So there are a lot of people that are learning about the benefits of it, but again, a lot of people are intimidated by it because it is more of a complex instrument. You know, you do want to understand the mechanics behind it. There are designs or, you know, ways that the index universal life policy can be designed that are not great for the consumer, right. So you want to definitely make sure that you’re working with someone that is, you know, has values as ethics, that’s a fiduciary that’s going to design it properly and do what’s in the best interest of the client. Because you can absolutely design these where it’s more beneficial for the agent versus the client, which is incorrect. Because of that complexity, a lot of people are just turned off. They don’t even really want to even look at it because out of fear. Again, it’s just a matter of understanding and it’s a matter of education and a matter of exposure. because of the complexity of it. A lot of even people that deal in insurance, they’d rather deal with term insurance policies because they’re simpler. They’d rather deal with whole life insurance policies because they’re simpler, necessarily marketed. So there’s different variables and reasons behind it. But really when you look at why it is valuable and why it’s important to learn about it, it’s because just cash value life insurance and it’s itself is a specific asset class that, there’s literally no other financial asset class that acts like it. There’s not a financial asset class, right, where you can take your money, put it inside of a policy, if it’s index, right. Put it inside of a policy that’s completely protected from market losses, that will be completely tax free. Right. As long as you keep that policy in place, you can access the funds tax free. You don’t have to pay those funds back into the policy. Right. The death benefits tax free that you can, you know, essentially attach long term care to, which is a huge reason.
>> Isha Vela: Why for no additional cost.
>> Claire Skinner: So you have a cost, you do pay for long term care insurance with it but it’s way cheaper, right? Because you’re, you’re kind of putting life insurance along with long term care. It’s way cheaper than if you were going to do a standalone long term care.
>> Isha Vela: Yes.
>> Claire Skinner: More benefits. You don’t have to worry about your premiums being increased on you like a lot of long term care plans do, right. With long term care insurance a lot of the times, and again, this is super important. A lot of people overlook this in their financial planning, their financial strategy, and it’s hugely important because long term care is super expensive now. Like anyone that’s ever dealt with their family getting older or someone being disabled in their family that needs to be in like a qualified care facility, it’s super expensive right now. Like, crazy averages. Like, I think just to have even someone coming in home right now to kind of service you at home can be thousands of dollars.
>> Isha Vela: Totally.
>> Claire Skinner: You get ready to retire, 20 years, 30 years, 40 years from now, with inflation, it’s going to be astronomical. And that’s why states like Washington state, they already actually have their citizens pain into like a state ran long term care plan because anticipate, like, how much it’s going to be with these huge, you know, generations that are coming along. Millennials, bigger generation than baby boomers, right. Gen Xers. So as we start aging, living longer, right. it’s going to become an even bigger problem. And the idea is like, how do I pay for that? How am I going to pay for those types of services? And a lot of times, you know, another reason people are like, well, maybe if I choose not to have kids or I’m not married or I don’t own a home, what’s the purpose of me having a cash value insurance policy? Maybe I only need a burial policy. And it’s because you can, number one, build wealth inside that policy tax free. But then you can also attach long term care to that policy and know that you’re going to get the benefit of that money one way or the other. If I buy a standalone long term care plan, 70% of us are going to use it if we are over the age of 65, but 30% aren’t I.
Most people have their retirement savings in tax deferred assets, right
So that means I have a three out of ten chance of, maybe not needing my long term care. And if I had a standalone long term care plan, that’s like car insurance, if I don’t use it, I lose it. Whereas attached to my cash value life insurance, then I’m going to get the benefit of it one way or the other, right?
>> Isha Vela: Whether I get exactly.
>> Claire Skinner: Or I get cash value or my family gets the benefit of it. So, you know, there’s so many different moving parts to, to why it makes sense for most people if you can literally qualify for it, because you, obviously, you have to medically qualify for it. If you medically qualify for it, it really is a great thing to have as a part of your portfolio, for sure.
>> Isha Vela: And one thing that I see a lot is that most people have their retirement savings in tax deferred assets.
>> Claire Skinner: Yeah.
>> Isha Vela: Yeah. And it’s just like we, you know, it’s such a, like a no brainer to move people in sort of a tax advantaged, asset class, because it’s like people underestimate, in my opinion, people underestimate the impact taxes have on whatever they’re saving. They just kind of, like, they think of it as a given, and it’s just like, okay, well, that’s just what happens. Without realizing that there are vehicles that they don’t pay taxes on when they start pulling out that money.
>> Claire Skinner: No, the tax implications are huge. I mean, I think all of us kind of know the big problem that we have federally with the deficits and how that just keeps on getting higher and higher and higher. And I don’t think that a lot of us are taking into account how changing legislation could affect how much we’re getting taxed later on.
>> Isha Vela: Right.
>> Claire Skinner: Pay for it. Right. Someone’s going to be paying for this, and that’s going to be coming from us. And, you know, maintaining the status quo is really not likely. Like, it’s going to probably be a situation where we’re going to see tax rates go up across the board to pay for it. So when you think about, you know, paying in the future, you know, 35%, 40%, 45% taxes and how that could affect what your 401K looks like. I mean, most people are not under the, you know, they say, okay, well, I’m a, I’m a 401K millionaire. Right? Well, yeah, maybe your 401K balance says a million dollars, but when you withdraw that, like, really, it’s more like $700,000 probably at a minimum. Most people are going to be, you know, right around 30% with federal taxes and state taxes. So you have to work that much harder, you know, to make up for that difference. Really what you’re looking at in your 401K is not what it actually is because you have to look at today’s taxes, let alone tomorrow’s taxes. and most people think that they’re going into a lower tax bracket, you know, when they get older, and that might be the case, but if you’ve done what you’re supposed to do, it’ll be higher. Be higher, or at least the same, right? Yeah.
>> Isha Vela: yeah.
>> Claire Skinner: And so that’s really what is scary about it, because it’s an unknown. It’s something that you can’t control. None of us control, like, the taxes that we’re going to pay in the future. You can only control what you can control, and what you control is how your money grows and where it’s growing. Right. You can control, like, okay, am I going to be putting the majority of my money into my 401K, or am I going to look at other options? Am I going to look at maxing out my Roth Ira? Right? And even your Roth IRa is amazing, but it has limitations, right? Uh-huh. Only if I’m under 50, save at, like, max of $7,000 a year. Right. If I’m, over 50, I can max save $8,000 a year. For most people in the lifestyle that they’re going to want to. They’re going to want to have, let alone, like, what inflation is going to dictate that you have to have. Because another thing people don’t really pay attention to is inflation. Right? And yes, it’s supposed to stay around two to 3%, and that’s what the Federal Reserve has been keeping our rates high for, for a long time. But who’s to say that it does stay at two to 3%? And what does that two to 3% look like? Because in reality, most of us understand that it feels like much more than that, you know, and a lot of the different things that we pay for. So if you’re paying attention to taxes and you’re not saying, hey, look, let me put my money in a place where I don’t even have to worry. It doesn’t matter if they raise the tax rate up to 40%, 45%, 50%, because my money’s growing in a Roth IRA, or my money’s growing in an index, universal life insurance policy, or my money I’m saving for my child’s college in a 529 plan, or whatever tax advantage instrument it is, if you’re not really, like, if you’re not focused on or being conscious of where you put your money, you could end up paying a whole lot more. Right. Just because you’re not paying attention to where and how it’s growing.
>> Isha Vela: Yeah. And I mean, it comes back to what you were saying earlier about, like, you said something earlier about paying attention. Paying attention like, how you’re spending money. And I think that that really, it comes down to, again, like, this presence. Presence with your money. This is sort of what I. What I teach people about, like, caring for your money, paying attention to your money, like, being discerning about where your money goes, where it flows, what you’re investing in, and having it be in alignment with your values.
>> Claire Skinner: Yes.
>> Isha Vela: Yeah. And so it’s like, I love that because it brings it back to it. Just grounds it again. Just pay attention. Be with. Be with your money. Be with your money. And then something that you teach a lot is just, like, the patience people. I mean, you tell me, like, I find that, yes, people tend to want to have things, like, grow quickly.
>> Claire Skinner: Yes.
>> Isha Vela: Right. They want it to happen fast.
If you have patience and you have consistency, you are going to win, right
So, yeah, I’d love for you to speak on that.
>> Claire Skinner: I mean, we are. We live in an instant gratification world, right? We are all spoiled because we can get what we want, when we want, whenever we want to. Tons of crypto millionaires, right?
>> Isha Vela: Yeah, yeah.
>> Claire Skinner: have invested relatively small and have gotten huge gains. And, yes, that can happen. Absolutely. That can happen. Right. Tried and true, though, I think is probably one of the more reliable things. And what I mean by that is even if you’re thinking about the stock market as a whole. Yeah, right. And I know, again, because we’re all super emotional creatures on different levels, right. We’re emotional when it comes to, like, oh, my God, like, the stock market is crazy right now. Like, I need to move my money right away. Right. And, a lot of trigger reactions when it comes to, like, our money. Right? Yes. you know, I have clients that I work with, and it can just be like, a shaky week. And they’re like. They’re like, is everything okay? And I’m like, a correction. A one day correction, a two day correctional week correction. Right. Is not a trend. Make a trend. Right. And these trigger reactions when we have them, a lot of times will prevent us from then reaping the gains and the benefits of the amazing days that come right after it.
>> Isha Vela: Yes.
>> Claire Skinner: You know, like, I think, like, literally, I think it could have been. It’s. Within the past 30 days, we had one of the worst market days that we’ve had since 2022. And then literally, within the same week, we had one of the best days that we’ve had. Yeah. It’s like this, people. I think, again, if we’re talking about patience, we’re talking about just the tried and true things and learning how not to think micro about investing, but think macro. Thank you. Right? Think 30,000 foot view. Because if I run projections from like, you know, literally going back to when they first started, actually even tracking the S and P 500, we’re talking about like the twenties, one thing that’s kind of been predictable is the growth rate. Market’s been on average. If you’re not working with a professional and you’re just investing in index funds, s and P 500 index funds, it grows on average at about 10%.
>> Isha Vela: Wow.
>> Claire Skinner: All the ups and downs, right? And a lot of us, like, we remember the 2008 recession, we remember the market crashing and 40% losses, just boom. Remember the.com bubble crash? 20 00 20 01 20 02 literally from 2000 to 2010, that decade, there were literally like two major periods, really, where you could have lost literally over 40% of your money twice. Right. Huge. So it’s like, okay, I came out of the nineties and nineties were amazing. For my money, I go into the two thousands and it’s like crap for my money, and then I’m getting out of the market. And then what happened? We had the longest bull run, the longest run of positive growth that we had for like the next decade. And that’s what I mean is like patience, not having trigger reactions, right? And, you know, the tried and true rule is this, if you have patience and you have consistency, you are going to win no matter what. Right. If you’re investing in the markets 20 years, 30 years, you’re going to win no matter what. Right? Even with all the ups and downs, how you want to get smart is not having all of your eggs in one basket being diversified, right. In every way that can possibly be diversified. Being tax diversified like we were just talking about having, you know, money that’s growing tax advantaged and tax free. Money that is growing tax deferred. Right. Reason being, maybe you want to get some of those write offs this year, right? money that you can access right now that you might pay taxes on every year, you might pay dividends on every year. But you want that money liquid and accessible, but diversified also in the different asset classes, right? Diversified into, you know, obviously cash. You have some cash on hand, you want to have some cash on hand. But being diversified in places where you’re in the markets. But then you might also have some domestic investments, you might have some foreign investments, right? you might have some investments into metals. You might have some investments into real estate. You know, you want to be as diversified as you possibly can be and then also diversified into fixed accounts, right. Accounts that you know what interest rate you’re getting? Variable. Obviously, that’s the markets, but then obviously index accounts, right, where you have market protection and if you have that type of diversification that allows you a lot of freedom because you’re not just having to pull your money from one place and you can, you know, strategically, you know, access your money, you know, in the appropriate times, right. If I’m, if I’m in retirement, maybe I don’t want to dip into that money that’s, in the middle of a correction. I want to not into my losses, right. I want to recovers and go to my indexed account or go to my fixed account and pull, and like those options, and I can magnify my wealth and magnify my income, if I’m smart and strategic about how I access those funds.
>> Isha Vela: So, okay, so this is great.
Insurance companies operate under much stricter standards than banks, right
So we’re talking diversification and really spreading ourselves, spreading out the risk, right. Because any investment involves risk and people don’t like risk, right. They feel unsafe, they don’t want to lose money. But every, there’s, there’s some instruments that have less risk involved, right. But often, the question that I get asked is like, oh, but, you know, is insurance FDIc, you know. Right. And because people trust banks, but banks are not doing anything for them and are, in fact, in my opinion, kind of exploiting people, at least, at least using their money to make more money for themselves.
>> Claire Skinner: For themselves, exactly. Like we’ve been talking about how, what they’ll pay you literally, like a fraction of a fraction, a fraction of a fraction. They’ll turn around and, like, give you a credit card for 20%. They’ll turn around and, you know, give you a mortgage for five, 6% or higher. Right, right. They are taking your money and leveraging it. And what a lot of people don’t realize about banks is we are under a system of what’s called fractional reserves. Right. under a fractional reserve system, which means that literally they don’t have to have every single dollar. Right. That you put into their system.
>> Isha Vela: Yes.
>> Claire Skinner: Right. So most banks, and it really kind of depends on the bank, but they’re anywhere from, like, 0% to, like, 20% reserves. Meaning that, hey, if I deposit $100, they have to maybe keep $20 at best, and then they can loan out the, other $80.
>> Isha Vela: Wow.
>> Claire Skinner: Right. So they are risky. And because of that risk, that’s why the federal government backs them up. Right. That’s why they’re backed up by FDIC, because of this fractional reserve system so that people can feel okay, like, you know what, the federal government’s backing it up. I can have up to $250,000 in an account. And if this bank fails because of this fractional reserve system or whatever is happening, I know that I’m going to be backed up by the government. $250,000 and that’s. Thank God for that, right? Yeah.
>> Isha Vela: Ah.
>> Claire Skinner: Most of the time we’ve seen situations where banks have collapsed. The government usually makes people whole immediately.
>> Isha Vela: Yeah.
>> Claire Skinner: But really the reality is the FDIC could take up to ten years to pay you back. That’s the reality, not what happens most of the time. Like I said, the federal government makes people hold pretty quickly, but they don’t have to. So if there was a situation where there were collapses to that degree, they would have time to kind of make people whole. Right. what a lot of people don’t realize when it comes to insurance is insurance companies operate under much, much stricter standards. Like way stricter standards than banks. Yeah. At the very bare minimum. At the very barest of minimum, an insurance company has to carry $2 for every $1 that they’re responsible for. Right. That’s by, like, by law to even be solvent.
>> Isha Vela: Yeah.
>> Claire Skinner: Most m insurance companies though, are like four to six times that. So for every dollar that they’re responsible for, they have four or cis. And that’s kind of where those ratings, like, if you’re looking at insurance ratings, a plus, a plus, plus, that basically goes to their financial stability, their financial security, showing you like, okay, this particular insurance company has way more in assets than they doing, like claims that they’re responsible for.
>> Isha Vela: Yes.
>> Claire Skinner: Right. So they operate that way. But again, nothing is infallible. So let’s say there was an insurance company to go down. Every state has an insurance guarantee association, and every insurance company is kind of paying into this association. And what happens basically, if an insurance company were to become insolvent, that’s where the state steps in. Right. And they actually make people whole with their claims. Right. They would first try to, you know, make sure that the industry, they could kind of rehabilitate the insurance company. They try to rehabilitate it, but if they’re not able to rehabilitate, the state insurance guarantee for each and every single state would shore up the claims in that particular insurance company. So, it’s not backed FDIC, but you absolutely have a much stronger financial standing when it comes to that. And that’s a huge reason why the majority of banks invest like billions and billions of dollars themselves into insurance because they’re literally like some of the most stable companies that you could have.
>> Isha Vela: Yes, exactly. And that’s what people don’t understand is the stability. And how do you, I mean, maybe, you know, you don’t know this, but how is it that? Why do you think that that’s what people believe? How did these beliefs develop? Why, are we, why are we in this place?
>> Claire Skinner: Yeah, about the stability of the companies.
>> Isha Vela: Or just about like people trusting banks and people being suspicious of life insurance. Like, why do you think that?
>> Claire Skinner: Well, again, so with banks, again, being trusting of a bank, I think, again, FDIC insurance, a lot of people recognize that. Right.
>> Isha Vela: Yeah.
>> Claire Skinner: You see these brick and mortar locations everywhere and they represent, I think, something institutional for the society. Right. It’s just something that we see when people go to banks, you know, to get loans, they’re used to, like, paying their mortgages through banks. Right?
>> Isha Vela: Yes.
>> Claire Skinner: So these are, you know, institutions that have been there.
>> Isha Vela: Got it, got it.
>> Claire Skinner: You know how they operate necessarily. Not everybody really, really, like, is aware of.
>> Isha Vela: Right.
>> Claire Skinner: But it’s a completely different system than what they originally started off, like being backed by gold. That’s not the case anymore.
>> Isha Vela: Yes. Yeah.
>> Claire Skinner: That stability, I think that people, knew about previously, maybe that’s kind of crossed over into present day, and that’s not necessarily the reality right now. What I will tell you is this, with insurance companies, there has been an evolving of the industry and there have been situations where people have had negative experiences with insurance companies. they have had negative experiences through the evolving of companies where maybe there was something that you had essentially previously, like a, variable universal policy.
Claire says most people think term insurance is temporary
Yeah, variable, universal. Life insurance policies are still around. A lot of them have evolved and a lot of them are great, but there was a lot of times, you know, where people were investing their money into policies where they were exposed to market losses and they saw their cash values deplete. Right. paying all these premiums and those are, again, things that kind of turn people, you know, off.
>> Isha Vela: Yes.
>> Claire Skinner: You know, there’s been situations where insurance companies have done unscrupulous things and they’ve denied people claims, you know, on. On different things. Yeah. So there have been certain experiences, but as a whole, again, if you’re just kind of looking at how long insurance has been around how many claims, and we’re talking about literally billions of dollars in claims that are literally paid out every year as a whole in the insurance company and the insurance industry, they’re really, you know, single handedly insurance is, is responsible for creating wealth for people more, more than a lot of other institutions and in a lot of other ways.
>> Isha Vela: Okay.
>> Claire Skinner: So I think for, again, the vast majority of people, it really is just a lack of that financial education. I think that’s really what it boils down to, is a lack of understanding of how these systems work. Right. a lot of the times, people also think insurance. They’re thinking term insurance, and they’re thinking.
>> Isha Vela: They don’t even know.
>> Claire Skinner: Right.
>> Isha Vela: When you say the word insurance, they think term, but they don’t understand that there’s this whole other category and how to use it. Yes, exactly.
>> Claire Skinner: A whole other way to use it. Most people think life insurance, somebody else gets paid if I die. They’re not thinking about the fact that there’s all these, other benefits and ways that you can use life insurance. And that’s, again, just because of the lack of education, what is marketed to us is term insurance.
>> Isha Vela: Yes, exactly.
>> Claire Skinner: And it’s like, why don’t you have life insurance yet apply and have life insurance and whatever? XYz, that’s term insurance.
>> Isha Vela: Yeah, yeah.
>> Claire Skinner: 90% of term insurance policies don’t pay out. Why is that? Because, most of us are not dying, you know, like, you know, prematurely.
>> Isha Vela: Yeah.
>> Claire Skinner: Accidents happen. Right. Sure. You want to protect your children. There is a reason to have term insurance. Right? Most, they have their insurance kind of set up properly. They’ll have some term insurance, they’ll have some permanent insurance. But most people don’t realize, again, hey, I have this term insurance, and it’s meant to be temporary. It’s meant to kind of COVID me if I pass away, that whoever I leave behind is taken care of and I’m financially replacing myself so that my family’s able to make the same choices here. But again, they’re not thinking about, okay, when I hit the ages of 60, 70, that term insurance is probably going to have expired. And if I wanted to renew that term insurance now, instead of me paying 30, $40 a month, I would have to pay 400, 500, $600 a month for not paying or able to pay those types of, you know, amounts for, again, what would be temporary insurance as they get older. So if you have, you know, your insurance set up properly, you know, when you’re younger and you have more responsibilities and you have dependents and you have a mortgage, that’s when you have a lot of term insurance to kind of COVID those things. And when it expires, the idea behind it is when it expires, you have your cash value insurance that’s permanent. That’s going to last you to age 120, that you’re going to be able to use for retirement and long term care and to leave a legacy behind for the people that you love and serving you in the period that it’s supposed to. Right. So, again, it’s just a lack, I think, of financial education around how you’re supposed to use insurance.
>> Isha Vela: Yes, yes. Yeah. The financial education piece. I mean, Claire, with you, I’ve just. I’m so grateful because I feel like my whole world has changed since becoming part of this team and working with you. Like, you’re my mentor, you’re my trainer, you’re my advisor, you’re the person I text almost every day and ask a question, you know? And it’s like, I feel like this, my m relationship with you, I’ve been really able to, like, flourish into, like, a level of self confidence, that, like, people really don’t understand how much education, like, especially financial education. Everybody needs money. Right. When we understand, even if we understand a system that we don’t like.
>> Claire Skinner: Yeah.
>> Isha Vela: We have to understand the way it works. Like, being ignorant of it doesn’t make it go away, and it doesn’t change.
>> Claire Skinner: It doesn’t change it. It really doesn’t. I love that you said it, that, being ignorant of it doesn’t change it. Not liking a lot of the parts of the industry. Right. There’s so many parts. And the things that we might not want to be associated with and, you know, things that we may not even want to, like, put our money into. Right. But the part. The point of the matter is, the reality is that we live in this.
>> Isha Vela: Yes.
>> Claire Skinner: And so you have to figure out a way to, like, make the best of it. Right. take the tax code and use it to your advantage. Right. Yeah. All, of these gatekeep secrets, learn them and put them to work for you so that you can then make enough money to then take that money and put it into causes and things that you do want to invest in. Right.
>> Isha Vela: Yeah.
>> Claire Skinner: we tend to, I think another thing that we emotionally do is kind of put our head in the sand. Right. And just, you know, choose to ignore it. Right. And really, again, the way to kind of take your power back and what you’ve done and what I’ve seen you do, Isha, is literally, like, take all of your power and become this super empowered individual because you’ve leaned into financial education. Right. And you’ve become an advocate for it because it does affect your life. It does change your life, it does give you peace of mind. It does take stress away things to you mentally, physically. It affects your world in so many different levels.
You said outsourcing your financial education is a problem
>> Isha Vela: Yeah. And I think that’s really what I want to, like, drill home. Like, yes, we talked about insurance and we talked about specific instruments that can help you, like, you know, build retirement, tax free retirement wealth. Sure, all of those things. But I think that the take home message here is the education and that, you know, we don’t take that. We are not often in environments where education is just coming at us. We’re not given accurate financial education or we’re giving contradictory financial education. And sometimes it is important to just, like, get in alignment with mentors that can deliver the information in ways that you can trust. Right. That where you have the relationship with the mentor that you feel like, yes, this person has done their research and they’re the real deal and they live, like, they walk the talk, to connect with those people and, like, get educated, like, pay someone. Right. Or see someone. and because, yeah, because the difference of, like, even being able to hold your own, like, like, for example, a lot of, I hear a lot of people saying, like, well, I’m going to run it by my family. Like, you know, we do a strategy with somebody, I’m going to run it by my dad who was a financial advisor, or I’m going to, like, going to talk to my uncle who made some investments, and I’m just like, oh, no, like, you’re going to, like, you’re going to get all of, like, you’re going to get a person’s advice based on outdated information. You’re going to, you’re outsourcing your education to somebody else. Yes. It’s always good to get second opinions. Like, why not?
>> Claire Skinner: Right.
>> Isha Vela: But when you’re not doing your own education, that’s when it becomes a problem.
>> Claire Skinner: It, really, truly is because, you know, the other kind of piece I’ll add to that, because you’re 1000% correct about that. I love that you said outsourcing your financial education. It’s just because there’s so many internal biases that people have.
>> Isha Vela: Yes.
>> Claire Skinner: Keep them within these silos and they don’t even look outside of them. And what might have been correct 1020 years ago is no longer the case anymore. And they’re still subscribed to an old set of facts.
>> Isha Vela: Yes.
>> Claire Skinner: Like applying and the financial industry is evolving and changing so quickly. Like, every single year, there’s, you know, new laws and there’s new financial instruments and there’s new things that you can do, and most people are not going to stay on top of that. And even if they’re in the industry, a lot of times, you know, people will stick to what’s easy and what they know. Right. Instead of actually like more and, learning about what’s out there. So, no, you’re going to be, you’re your own biggest fiduciary. Go and do your own research and look these things up for yourself because there’s so many different resources and there’s so many different books and there’s so much information, and there’s so many different ways, for lack of a better term, to skin a cat. Right. So they’re, they’re the person that is giving you advice might be giving you some great advice, but that doesn’t mean the advice that you’ve gotten is bad. It just means, hey, this is a different way. And that didn’t actually be a better way. Right. You’re not able to determine which way until you do your own research. you take, you know, use your own internal compass.
>> Isha Vela: Yeah.
>> Claire Skinner: People, you know, if you take the time to do that, you can really kind of lean into that decision, a lot more. If you take the time to do that research, m and it will empower you. Like, I think that is so key that you said that. and I really wish a lot more people would do that.
>> Isha Vela: Yeah. And, I mean, your aim when you meet with people, like, I remember when, when you and I met, you wanted to explain every detail to me because you really wanted me to understand what, I was investing in. You weren’t just kind of like, wanting to get me to put my money into something, you were really wanting me to understand it. And for me, that put me so at ease, even though I had no idea what you were saying to me at the time, I was just like, oh, my God, this is a lot of information. But you were really willing to go there with me and deliver it. Right. Because you wanted me to have that empowered feeling and feel like I was a yes to this. Like, I was excited about it. And that’s eventually what did happen. I did get excited about it.
>> Claire Skinner: Yes, no. And it does, because it does seem overwhelming all at first. Right. It’s like learning a new language. But yes, there’s so many people that you know will work with you and tell you what to do. Like, you write someone that’s not only telling you, like, what to do with your money, but why to do it with your money. Like, what are the, what are the financial. What are the concepts behind why you’re telling me that? To me, like, is you’re now worried about empowering the person and making sure that they understand it. Because I think when people understand the why behind something, they’re way more likely to stick to it. Right. And make it make sense to them. Like, I know, like, what this is going to do for me. I know why it’s doing it for me, you know, and I know, like, how impact me if I don’t have it. Yeah, yeah. Like, those are the things that are really important and it has to come from that place of wanting to educate just at that very basic level. and it might take some time, right. But if you’re again, working with the right person, they’re going to take the time to make sure that you understand all the moving parts, and how they are actually towards you hitting your goals.
>> Isha Vela: Yeah, yeah.
How much time do you spend educating yourself on financial topics
And I mean, I’m just curious and this is like a real question that I’ve never asked you, but, like, how much time do you spend educating yourself, keeping up with all of, like, the new AI powered indexes, for example?
>> Claire Skinner: Yes. Oh, my God. Like, accounted for because I’m like a nerd. Like, seriously, like, I am. Like, so that stuff is intriguing to me. Anyway, God, if I, like, I feel it’s such a funny question that you’ve asked me because I actively, consciously try to, like, make sure, sure that I’m consistently reading books. I probably am reading at least one to two financial books, like every month, but I can’t tell you how many, like, rabbit holes that I, like, fall into on a daily basis where I’ll see something on my screen and I’ll be like, hold on.
>> Isha Vela: Huh?
>> Claire Skinner: Huh? And then I’m literally there for the next 2 hours, like, looking it up. So, like, and like, I will tell you this, that’s, again, just because I enjoy it and love it, it consistently has to be at least me putting at least, I would say, a minimum of an hour a day and to just, again, staying on top of things right through reading the book or literally, like, okay, this new product came out. Like, let me see what this had. Like, what, you know, the bullet points on this, how it works.
>> Isha Vela: Yeah.
>> Claire Skinner: When I’m doing case designs, I’m listening to podcasts or I’m listening to a financial expert talk about something and I. And so, like, a lot of times when I’m doing that, case design is I’m actually using it to learn and work at the same exact time. So, wow. I try and again, it’s because I feel like this is my job. Right.
>> Isha Vela: Yeah.
>> Claire Skinner: What else to do? That. But it’s my job and I really do enjoy it. And it’s fascinating enough, I think, to that point, especially because I do take a lot of responsibility when it comes to assisting people with their money. Right. That’s the big deal. That’s a huge undertaking. And so I want to make sure that, like, I do stay educated about the best things, the best ideas, the best strategies for, for my clients.
>> Isha Vela: Yeah, yeah. No, and it’s like you really are all about mastery. Right. Like, and just always enhancing what you know. And I just like something that we were talking about earlier that I think I want listeners to hear is when they go and ask people for second opinions. What I want people to know is that when it comes to money, it’s one of those places where we like to think we know. We like to think that we know we want a sense of certainty because it is absolutely uncertain. We don’t know how the markets are going to behave. But it is kind of tempting to be like, oh, yeah, this works and this is bad, or this is good. Right. and to be definitive about it. But the fact is that this is like, this is, there is a lot of uncertainty, there is risk involved. And, like, the safer you feel, like the education is what gives you the safety to take those risks in a conscious and measured way. And then, of course, diversify. Right. And so that’s like, that’s what makes it safer is just knowing that you don’t know everything and you have to know sort of the risk that’s involved and then to make sure that you have, like, money parked in other places to mitigate it. Yeah.
>> Claire Skinner: Got, it. All right. I mean, that’s really what it’s about. Like, it’s that financial education, I think, makes you feel so much more at ease with the risk that you take on. It really does. And, like, again, being. Knowing that you have, you know, multiple. Multiple eggs. Right.
>> Isha Vela: Yes.
>> Claire Skinner: You’re not multiple eggs. Multiple baskets.
>> Isha Vela: Exactly.
>> Claire Skinner: That can, again, help you to really mitigate your risk, just like you said. Like, those are the main things. Patience, education, you know, diversification, all of those things that are tried and true. Like, true still to this day still works. And those are still some of the best wealth building measures. Right. That I for sure stick by because I’ve seen it manifest, for people time and time and time again, much more so than anything. Instant gratification.
>> Isha Vela: Beautiful. Thank you so much for this conversation that the time flew by so quickly.
>> Claire Skinner: It did. It flies by when you’re having fun and we could talk about this stuff for forever, so.
>> Isha Vela: Yeah. Yeah.
>> Claire Skinner: So much.
>> Isha Vela: Yeah. And I, you know, I’m not going to tell people where to find you because you’re not online. You are buried in a book and in indexes and figuring that’s where she is, folks.
>> Claire Skinner: Yeah. All of that.
>> Isha Vela: You’ll have to just, like, reach out to me if you want to, like, book, a session with Claire, which you can totally do. Yeah, just reach out to me.
>> Claire Skinner: Absolutely.
All right. Thank you so much, Claire. I’m so grateful that you’re in my life
>> Isha Vela: All right. Thank you so much, Claire. I love you so much. And I just, like, I’m so, Yeah. I’m so grateful that you’re in my life. It’s just you’ve changed my life.
>> Claire Skinner: Well, the feeling is extremely mutual, Isha. Literally, I look forward to our conversations and our everyday text messages, so. Love you. Love you. Love you. To thesis. thank you.
>> Isha Vela: Thank you for listening to today’s episode. Remember to hit the subscribe button to get notified of new episodes dropping on the new and full moons of each month. And if you haven’t already, leave us a five star review on iTunes to make sure that everyone who needs this transmission receives it. Until the next episode, I’m sending you fierce, fierce love.