THE NO-COMPROMISE RETIREMENT PLAN • 85
percentage of assets throughout the life of the account. For exam- ple, this year you might owe 2 percent in fees on your account that currently has $100,000 in it. You would pay $2,000 in fees. You will likely owe that same 2 percent of fees in twenty years, when your account has grown to, say, $500,000. That year, you would owe $10,000 in fees. In an IUL policy, fees are structured differ- ently. In these products, fees are typically front-loaded to pay a higher percentage on assets in early years, when the account bal- ance is low. That means you’re paying more fees when you have a little money, and dramatically less in fees when your account has grown. So, to compare fees in both products, I had to convert an IUL’s fees into an annualized percentage, just like in a 401(k). I took Neil, who was forty at the time, and compared the fees he was paying in his 401(k) to the fees he’d pay in an IUL policy. Then we pitted the average annual fee from both strategies against each other. What we discovered blew Neil away, and made him a true be- liever. I think it will blow you away, too. The advisors Neil had been working with in his previous job usually charged their clients around 1 percent for their services. When added to mutual fund fees and other fees, their clients were paying 2 percent or more in portfolios that boasted about their low-cost nature. How did IUL fare? In one IUL product I examined, Neil would be paying, on average, 0.76 percent of his annual account value in fees. For half the cost of the average 401(k) and a third of the cost of the average advisor-managed account, Neil could access all the benefits of IUL. (I know you’re curious: What was the cost of my IUL policy? After all, my wife and I are in our sixties. It has to be expensive, right? Well, in our plan, my wife and I expect our expenses to av- erage around 1.22 percent a year — less than I pay in most of my retirement accounts.)
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