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 Problem with Target Date Funds
The Power Of Zero Show
David McKnight looks at Target Date Funds (TDFs) and why their set-it-and-forget-it approach to investing is NOT something you should rely on. David kicks things off by explaining how TDFs work, including why they tend to be a popular option for novice investors. While it sounds like an excellent approach, David points out two major flaws. “A lot of the problems with TDFs come down to sustainable withdrawal rates in retirement,” says David. The 4% Rule consists of you being able to withdraw 4% of your day one balance in retirement, adjusted every year thereafter for inflation....
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I've Maxed Out My 401(k), Now What?
The Power Of Zero Show
In this episode of the Power of Zero Show, host David McKnight discusses the scenario in which you have maxed out your 401(k) and are wondering where you should invest the rest of your money. The episode kicks off with David addressing the type of 401(k)s you should be investing in first. There are two types of 401(k)s: the traditional pre-tax 401(k) and the Roth 401(k). Should you go for a traditional 401(k) or a Roth 401(k)? It all depends on whether you think your tax bracket is likely to be lower or higher in retirement… With the national debt set to hit $62 trillion by the year 2035,...
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Why Does the Incoming SEC Chair Paul Atkins Have 54 Life Insurance Policies?
The Power Of Zero Show
In this episode of the Power of Zero Show, host David McKnight addresses the claim that sees Paul Atkins owning 54 life insurance policies for an astounding 10% of his $327 million net worth. Someone may ask themselves why someone with such a massive net worth would own so many life insurance policies…and even why someone who has equity in Chinese tech giant Alibaba, holdings in cryptocurrency, and stakes in venture capital firms would also want their wealth growing in cash value life insurance policies. Looking at Atkins, who’s President Trump’s nominee to chair the Securities and...
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The 8 Taxes You Could Pay When Doing a Roth Conversion (Is it worth it?)
The Power Of Zero Show
In this episode of the Power of Zero Show, host David McKnight looks at every possible tax or cost that may result from a Roth conversion. The first tax you’ll have to pay when executing a Roth conversion is federal income tax. Whatever portion of your IRA you convert to Roth is realized as ordinary income and piled right on top of all your other income. David is an advocate for not converting to Roth unless you think your federal tax rate in retirement is likely to be higher than it is today. The second tax you could end up paying when doing a Roth conversion is state tax. The...
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Should You Take More Risk in Your Roth Accounts Than Your Other Investments?
The Power Of Zero Show
This episode of the Power of Zero show explores whether you should be taking more risks in your Roth accounts than in your other investments. Host David McKnight kicks things off by stating that if you have Roth IRAs or Roth 401(k)s in your portfolio, you should be allocating 100% of these dollars to a stock allocation. That’s because these are your most tax-efficient investments and they’ll remain tax-free right up until your death – and even 10 years beyond. Remember: you want the biggest returns in your portfolio to take place in a tax-free environment. David explains which of your...
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Debunking Doug Andrew’s Roth IRA Hit Job Video
The Power Of Zero Show
In this episode of The Power of Zero Show, host David McKnight looks at Doug Andrew’s recent video in which he implored his audience to never use a Roth IRA or a Roth 401(k) again. Andrew sees Indexed Universal Life insurance (IUL) as far superior and believes it should be the source of the vast majority of your distributions in retirement. While David likes IUL in certain circumstances, he isn’t a fan of sales strategies that debase every other viable tax-free alternative in an effort to exalt IULs. For David, the video is riffed with errors, exaggerations and omissions. Moreover,...
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What Percentage of Your Retirement Savings Should You Have in Traditional IRA vs. Roth?
The Power Of Zero Show
What percentage of your retirement savings should you allocate toward traditional IRAs and 401(k)s vs. Roth IRAs and Roth 401(k)s? That’s what this episode explores. Traditional financial guru advice says that it’s impossible to predict where tax rates are going down the road. Therefore, you may hear that your best bet is to simply have 50% of your money in tax-deferred and 50% of your money tax-free. David is somehow perplexed by the guru’s point of view about the future of tax rates being an unknown. However, signs that things won’t be the same appear to be evident. The current...
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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....
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