The Guru Gap: How America’s Financial Gurus Are Leading You Astray and How to Get Back on Track
Release Date: 01/29/2025
The Five Cardinal Rules of Roth Conversions
The Power Of Zero Show
David McKnight goes through his five cardinal rules for doing a Roth conversion. The first principle is simple: don’t do a Roth conversion that bumps you into a tax bracket that gives you heartburn. Not sure about what a heartburn-inducing tax bracket looks like? David shares a simple “rule of thumb” you can follow. In your zeal to get your Roth conversion done before tax rates go up for good, don’t bump into the 32% tax bracket along the way. The second cardinal rule ties into the almost certainty that Congress will extend the Trump tax cuts through 2033 – make sure to stretch your...
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How to Take Advantage of the Retirement Income Valley for Roth Conversions
The Power Of Zero Show
Wondering when you should start thinking about a Roth conversion? That’s exactly what David McKnight dives into in this episode of The Power of Zero Show. The retirement valley is that dip in taxable income that happens after you retire but before RMDs kick in – at age 73 or 75, depending on your birth year. David walks through an example: you’ve got $2 million in your IRA and want to convert all of it to Roth. If you take action during that valley, you can convert more while staying in the 24% tax bracket the whole time. Not taking action now? Think of 2035 as the year tax rates are set...
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In What Order Should I Spend Down My Assets in Retirement?
The Power Of Zero Show
David McKnight addresses the most efficient order in which to spend your assets in retirement. Online programs and algorithms that forecast and run calculations related to your retirement assets suggest starting with your tax-deferred assets like 401(k)s or IRAs. Such tools recommend spending down your tax-deferred assets now, when tax rates are low, and your tax-free assets later – when tax rates are likely to be higher than they are today. Reminder: regardless of the distribution strategy you choose, it should aim to maximize the likelihood that your money lasts as long as you do....
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Suze Orman Says Have 3 to 5 Years of Living Expenses in CASH During Retirement (Good Idea?)
The Power Of Zero Show
Today’s episode of The Power of Zero Show looks at a recent podcast episode in which Suze Orman recommended having three to five years of living expenses in cash during retirement. Experts have long debated the rate at which retirees can draw down their assets while maintaining a high likelihood of not running out of money before they die. Since the early ‘90s, the gold standard for sustainable distributions has been the 4% Rule. According to the 4% Rule, whether the market goes up or down, you can reliably withdraw 4% each year with high confidence that you won’t outlive your money....
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5 Huge Benefits of the Roth IRA!
The Power Of Zero Show
Today’s episode addresses five reasons why a Roth IRA is one of David KcKnight’s favorite tax-free investments. Unlike other retirement accounts, Roth IRAs give you 100% liquidity on all contributions. While David isn’t necessarily suggesting that you use your Roth IRA as an emergency fund, it’s nice to know that you won’t have to wait until age 59 ½ to be able to access those funds. If you happen to take out your Roth IRA contributions, you can put that money back within 60 days as long as your Roth IRA was not involved in a rollover during the 12 months preceding the date of...
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Two Huge Problems with Whole Life Insurance
The Power Of Zero Show
This episode of The Power of Zero Show is part of David McKnight’s podcast interview with Caleb Guilliams and Tom Wall, PhD. David touches upon a recent Ernst & Young study where whole life insurance was used as a buffer-type strategy. When it comes to the “risk continuum”, David sees IUL as slightly on the right side of whole life insurance. IUL is something worth doing only if you think that risk premium can get you a slightly higher rate of return over time. David recognizes that IUL has risks but that, in exchange for those risks, you can get somewhat of a higher rate of...
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Academics LOVE Annuities – Why Do Investors HATE Them?
The Power Of Zero Show
Today’s episode of The Power of Zero Show features part of David McKnight’s conversation with Caleb Guilliams and Tom Wall, PhD. David kicks things off by addressing the liquidity issue. Handing a chunk of your retirement savings over to an insurance company in exchange for a stream of income that’s guaranteed to last as long as you do sounds great in principle, but people often have consternation about it… The thought of losing liquidity on a significant portion of their net worth is what prevents some Americans from opting for SPEAs and DIAAs. David explains why a fixed index annuity...
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How IUL Fits in a Balanced Approach to Tax-Free Retirement
The Power Of Zero Show
This episode of The Power of Zero Show is part of David McKnight’s conversation with Caleb Guilliams and Tom Wall, PhD. David touches upon the “dangerous partnership” between the American people and the IRS. David is an advocate for a balanced, comprehensive, approach to tax-free retirement – he explains why that’s the case. One of the things David likes about IULs is the fact that they can perform specific applications that no other stream of income, such as Roth IRAs and Roth 401(k)s, can do. David goes over the unique trait of each of the streams of tax-free income he sees as key...
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Your Authoritative Guide to Tax-Free Retirement Planning in 2025
The Power Of Zero Show
In this episode of The Power of Zero Show, David McKnight addresses different strategies for tax-free retirement planning in 2025. Most Americans are a little nervous when it comes to the fiscal trajectory of the U.S.. According to expert forecasts, the likely extension of the 2017 Trump tax cuts would take the current $36 trillion of national debt beyond the estimated $54 trillion by 2034 – taking it all the way to $59 trillion. A recent Penn Wharton study predicts that if the U.S. doesn’t right its fiscal ship of state by 2034, no combination of raising taxes or cutting spending will...
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Expecting a Pension? Strongly Consider a Roth Conversion
The Power Of Zero Show
David McKnight discusses a couple of really good reasons for doing a Roth conversion when you’re expecting a pension in retirement. David sees the American tax system functioning in a similar way as a graduated cylinder. Your income goes in and flows all the way down to the bottom. Some of your money gets taxed at 10%, at 12%, 22%, some at 24%, 32%, at 35%, and some at 37%. Jeff Bezos, too, has some of his earned income taxed at 10% (only for about 3 seconds, though!). If you’re planning on receiving a pension in retirement, understanding how this “tax cylinder” works will...
info_outlineToday’s episode is a podcast guest interview David McKnight did for Josh Jalinski’s The Financial Quarterback Podcast.
David gives Josh’s audience a quick bio that spans from his early days in the financial services space in 1997 all the way to his latest book The Guru Gap.
The premise of The Guru Gap is the difference between the 1990s when people had very few options to vet out financial planning advice and today, where they have plenty of ways to vet out.
Nowadays, whenever David makes a financial recommendation, 90% of his clients take to the internet to vet that recommendation.
In The Guru Gap, David focuses on financial gurus Dave Ramsey, Suze Orman, Ken Fisher, Clark Howard, and Ramit Sethi – and their advice.
Since financial gurus aim at taking important and complex financial principles and distilling them down into 10-second sound bites, they tend to give short shrift to a lot of details David’s clients would need to protect and grow their retirement savings.
The #1 goal most Americans have is to have their money last as long as they do.
Financial gurus have had an adversarial stance toward financial planners like David and Josh Jalinski.
Some of David’s clients who seem to put more stock into what these gurus have to say tend to forget that their advice typically isn’t undergirded by math and actuarial science…
Josh Jalinski shares a couple of stories that really tick him off when it comes to financial gurus and the consequences of their advice.
David believes that America is better off with people like Dave Ramseys and the like in it than without them.
“If you’re making $50,000 and spending $60,000 Dave Ramsey is precisely the person you should be talking to,” says David McKnight.
David sees people like Dave Ramsey be “good for bad investors, and bad for good investors”.
Wade Pfau thinks that following Ramsey’s advice of taking 8% withdrawal rates on your assets in retirement and putting 100% of your allocation in stocks, you’ll run out of money in advance of life expectancy 63% of the time.
David touches upon the so-called Dave Ramsey circle of poverty: he gets you out of debt on the road to financial success, and then he promptly bankrupts you by taking an 8% withdrawal rate.
Josh shares his thoughts on Dave Ramsey and explains that some people never save.
Citing former Comptroller General David Walker and Penn Wharton David talks about what could be waiting for the U.S. in the near future.
David gives out a couple of reasons why you should think about doing a Roth conversion.
David and Josh talk about saving future taxes when someone passes away.
A key question to ask yourself: Why not pay the tax today at 22% or 24%, so that your kids can inherit that money tax-free regardless of when they liquidate it?
David reveals that, because of The Guru Gap, he has received a cease and desist from one of the financial gurus mentioned in the book.
Josh and David dissect “the Ken Fisher approach” – including its key flaws and shortcomings.
In Josh’s opinion, one of the negative traits of financial gurus is their lack of availability for debate.
For David, the least expensive way to purge the longevity risk from your portfolio is an annuity.
Josh and David bring up financial advisors dispensing advice on TikTok into the conversation.
The overwhelming amount of tips shared by gurus leads to people making bad decisions or not making a decision at all.
Of the five financial gurus mentioned in The Guru Gap, Suze Orman (the only CFP of that group) is the one David McKnight likes the most, also because her advice is most in line with the mainstream financial planning consensus.
Ramit Sethi is the financial guru that seems to have the most adversarial approach toward financial planners.
David used to be a fan of Clark Howard who now has a strong opinion about cash-value life insurance and fixed-income annuities.
David lists steps people should be taking with their money from a tax and retirement perspective.
According to David, if ever there were a time in the history of our country to be undertaking a Roth conversion, it’s over the course of the next nine years.
Josh and David discuss a balanced financial plan that includes annuities to counter longevity risks, insurance to protect one’s family, money as a volatility buffer, equities to beat inflation, some Bitcoin, a little gold, and cash for emergencies.
Mentioned in this episode:
David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
Josh Jalinski, The Financial Quarterback
How to Get Rich (Ramit’s Netflix special)
I Will Teach You to Be Rich: No Guilt. No Excuses. Just a 6-Week Program That Works by Ramit Sethi
How to Spot a False Prophet in the World of Finance (episode of The Financial Quarterback)
DOGE – Department of Government Efficiency
American Equity Investment Life Insurance (AEL)
Ernst & Young’s study on life insurance and annuities