Roccy Knows

Roccy DeFrancesco
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Roccy DeFrancesco is a "recovering attorney" who puts popular financial advice on trial. Each episode, Roccy — founder of The Wealth Preservation Institute and author of over a dozen books on asset protection and wealth preservation — breaks down the claims made by big-name financial personalities like Dave Ramsey, Suze Orman, and Ken Fisher, and shows you the details they leave out. Topics include annuities, indexed universal life insurance, whole life insurance, 529 plans, estate planning, and how to spot a bad advisor before they cost you. Sourced, on the record, no sales pitch — just the numbers most advisors won't show you. New episodes weekly. Subscribe and see for yourself.

  1. 1d ago

    How to Reduce Investment Risk Before Retirement

    Most people don't really understand how much risk they're taking with their investments. That's Roccy DeFrancesco's view, and in this episode he walks through his Understanding and Reducing Investment Risk presentation: how to measure your risk, why one bad downturn near retirement can wreck a plan, and the tools he uses to reduce that risk. Three questions your advisor should already have asked you: Risk tolerance: how do you feel when the market drops 20%, 30%, 40% or even 50%? Do you want to buy, sell or hold?Risk capacity: your financial ability to take risk, which has nothing to do with how you feel. Roccy says the two are often out of line: wealthy but very risk-averse, or not much money but a love of risk.The risk of your actual investments: do you know how risky your current holdings are?Risk scores. Roccy explains risk scores on a 0 to 100 scale and says most consumers come in between 30 and 45, lower as they get older. He says single stocks like Apple, Google, Amazon, Netflix, Nvidia and Meta score 100. That doesn't mean they don't belong in a portfolio, he says, but risky assets need to be actively risk-managed. A Ken Fisher portfolio, scored. Roccy says his team obtained a portfolio that Ken Fisher's firm recommended and used with a consumer, and ran it through his software. By his account it scored an 82, was down about 24% in the 2022 downturn, and his AI tool estimates it would have been down about 61.5% in 2007, with a worst case today of about 66%. He compares it with his own firm's growth portfolio, which he says scored 53 with a smaller drawdown and a slightly higher return. These are Roccy's figures from his own software; Fisher Investments hasn't responded. Why risk matters most near retirement. Roccy's example is a couple at 65 with about $850,000. With a steady return every year, they'd leave about $460,000 to their heirs at 89. Add a 35% drop like a 60/40 portfolio saw in 2007–2008, and they run out of money more than five years early. Even with a quick recovery, they still run out a few years early. Why he dislikes buy-and-hold asset allocation. Roccy calls the classic rebalanced 60/40 portfolio "the worst of all worlds": not enough growth in up years and too much risk in down years. He says if that's all your advisor does, you could get the same from a robo platform or AI tool. He prefers active, risk-managed money management, while admitting that most firms that try it do a poor job and don't beat their benchmarks. Tools Roccy uses to reduce risk: Fixed index annuities as a bond alternative. No risk of loss and gains are locked in each year, in exchange for a cap or participation rate. On his slide, a 9% cap annuity returned about 7% over 10 years, while the aggregate bond index returned about 1.41% with a 17% drawdown. Swapping the bond side of a 60/40 for a fixed index annuity cut the drawdown from 21% to 15.5% on his slide. He expects these products to return 3% to 5%, maybe 6%, over time, and says the recent number reflects a bull market. He generally uses them for people 55 and older.Indexed universal life, designed for minimal death benefit, as a tax-free, no-loss growth asset. His example uses a 12% cap policy through the 2000–2009 "lost decade," when he says the S&P 500 averaged slightly negative and the policy's cash value earned about 5.5%. He says it works best for people under 55, and the younger the better.Structured notes from large investment banks: buffer notes, barrier notes, income notes and his favorite, the dual-directional note. In his 24-month S&P 500 example with a 20% buffer and a 20.5% cap, a market down 20% pays you +20%, a market down 25% leaves you down 5%, and gains above 20.5% are capped. Terms change daily, and these notes come through an investment firm, not a self-directed account.Guaranteed income riders. His example has a 9.5% compounded roll-up for up to 10 years and a 6.5% payout rate at 65. Roccy is clear that the roll-up isn't a walk-away value: it's only used to calculate the income, there's a rider fee, and he expects the underlying account to earn 3% to 5%. He thinks they help affluent clients too, because guaranteed income lets them invest the rest more aggressively.His conclusion: real diversification means a mix of different assets, not just stocks and bonds, and not everything in any one product. Resources mentioned: Read Roccy's book Retire Without Risk free, which covers the pros and cons of indexed annuities and indexed universal life. It's also on Amazon.Download the guaranteed income white paper on income riders for the affluent and non-affluent.Find your personal risk score with Roccy's free risk tolerance questionnaire.Score the risk of your investments one holding at a time. To have your whole portfolio scored, email roccy@thewpi.org.His book Bad Advisors: How to Identify Them, How to Avoid Them, which he mentions on air.Disclosure: Roccy built the risk scoring software used in this episode, co-founded the AI tool used for the drawdown forecasts, and runs the registered investment advisory firm whose portfolios he compares. He also earns compensation on life insurance and annuity sales. The comparisons, the Ken Fisher portfolio figures and his views on buy-and-hold investing are his own. Past returns and the illustrated examples don't guarantee future results. Annuity and life insurance guarantees depend on the issuing company. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

  2. Oct 30

    How to Pay Off Your Mortgage Faster With a HELOC

    Most people know about biweekly payments or making one extra mortgage payment a year. This episode covers something different. Roccy DeFrancesco walks through what he calls the Home Equity Acceleration Plan (HEAP), a strategy that has been around for nearly 30 years (it goes by other names in the industry) and uses a home equity line of credit to pay off a mortgage years early, without changing your normal spending habits. The idea in one line: use every available dollar, every single day, to pay down mortgage debt instead of leaving it in a checking account earning close to nothing. Why it works, according to Roccy: Mortgage interest is paid in arrears. Each payment covers interest that already built up over the past month.Banks charge that interest daily, even though you pay monthly.Money sitting in checking earns little or nothing, and whatever it earns is taxable.Who it works for: people who spend less than they make, carry some balance in checking during the month, and have equity in their home. The bigger the monthly surplus, the faster it works. Roccy is clear that it can't help anyone running a monthly deficit. How it works: Build a proper monthly budget.Open a HELOC and draw part of it (say $10,000 of a $25,000 line), then put that draw toward the primary mortgage.Run your paychecks into the HELOC instead of a checking account, and pay your bills from the HELOC.Your monthly surplus steadily pays the HELOC back down. When it gets close to zero, draw again and send another lump to the mortgage.The unused part of the line works as an emergency fund. The HELOC rate is usually a little higher than the mortgage rate, but Roccy says that matters little when the HELOC balance is small compared with the mortgage. Example one: a $200,000 mortgage at 6.25%. In month one, more than $1,000 of the payment goes to interest and only $187 to principal, and five years in it's still $973 to interest and $257 to principal. The household takes home $5,000 a month, spends $3,681 (mortgage, $1,650 of bills and $800 of other spending) and has a surplus of about $1,300. On the standard 30-year schedule, total payments come to about $443,000, including $243,000 of interest. With HEAP, by Roccy's numbers, total payments drop to about $249,000, with roughly $59,000 of interest. The mortgage is paid off in 8.5 years, saving more than $183,000. Example two, from his software: a $550,000 mortgage at 7% with a $25,000 HELOC and the same roughly $1,307 monthly surplus. The 30-year schedule carries more than $700,000 of interest. Roccy says HEAP pays it off about 14 and a half years early and saves about $385,000. When it makes the most sense: Roccy says that with a 4% to 5.5% mortgage, paying it off early may not be your best move if you can invest at 6% to 7%. At 6% to 6.5% and up, he thinks the case for paying it down is much stronger. If you miss your budget: a month with no surplus, or even a negative month, doesn't break the plan, Roccy says. It just takes longer to pay off the mortgage. You can run it as aggressively or as passively as you want. Watch out for expensive software. Roccy warns about multi-level marketing groups selling mortgage acceleration software for around $3,500, with other versions at $1,500, $2,000 or even $5,000, often pitched as if the plan won't work without it. In his view you don't need software at all if you understand the math. He also explains why many advisors have never heard of the strategy: it's a niche topic most of the industry doesn't teach. Resources mentioned: Run your own numbers with the free HEAP report. Roccy says it takes about 90 seconds.Download Roccy's HEAP book free. It's the "link at the bottom of this video" he mentions, and it walks through the plan more slowly.HEAP software: free for clients of the firms Roccy works with, or $250 for lifetime access. Email roccy@thewpi.org for access or with questions.His book Bad Advisors: How to Identify Them, How to Avoid Them, which he mentions on air.Disclosure: Roccy co-founded the financial planning, investment and insurance firms he mentions, sells lifetime access to the HEAP software for $250 (free to their clients), wrote the book on the plan and Bad Advisors, and earns compensation on life insurance and annuity sales. His claim that the plan has no risk or downside is his own view. HELOCs usually have variable rates, are secured by your home, and can be reduced or frozen by the lender. The examples assume the same monthly surplus every month. Your results will depend on your rates, balances and budget. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

  3. Oct 23

    Estate Planning Basics: Wills, Trusts and Power of Attorney

    Roughly half of Americans don't have an estate plan in place, and Roccy DeFrancesco estimates only about 30% have a will. In this episode Roccy, an attorney who has worked in this area for about 30 years, walks through the documents everyone needs, the pitfalls he sees most often, and three issues he thinks belong in every estate plan: living longer than you expect, guaranteed retirement income and long-term care. Start with your beneficiary designations. Life insurance, annuities, retirement accounts, pensions and bank accounts pass to whoever is named on the account, not to whoever is named in your will. Roccy points to the Supreme Court's Kennedy case, where a pension's beneficiary designation controlled over what the family expected. If you've had a divorce, a death in the family or another big life change in the last few years, check every one. The core documents: A will. Die without one ("intestate") and your state decides who gets your money. If you have minor children, Roccy says a will is essential because it names their guardian. He tells the story of family friends killed in a crash whose children survived, and whose grandparents spent tens of thousands of dollars fighting over custody because there was no will. A will alone does not avoid probate.A legal (financial) power of attorney. If you're incapacitated, nobody can legally pay your bills, access your accounts or sell stocks in a crash on your behalf, even if they have your passwords.A medical power of attorney. Names who makes medical decisions for you, including end-of-life choices. Without these powers, your family may have to hire an attorney and go to court, and in an emergency there's no time for that.A revocable living trust. Avoids probate, which Roccy says costs time and money (he says it can approach 10% of the estate in Illinois) and puts your assets on the public record. The trust only works if your assets are actually retitled into it. Anything left outside will still be probated.Why Roccy doesn't like outright distributions to heirs. Many trusts, especially online forms, pay out to children in chunks at certain ages. Roccy prefers keeping the money in trust longer, with "health and welfare" provisions that still cover housing, bills, school and a business plan, to protect it from three things: divorce (inherited money usually ends up in a joint account), addiction (often starting with pain medication after an injury) and gambling. On online legal services: In Roccy's opinion, LegalZoom and similar form companies produce cookie-cutter documents, often skip retitling your assets, and leave your heirs no recourse if something is wrong. He notes he no longer drafts documents himself. His rough price ranges for wills, trusts and powers of attorney: about $2,000 in a small city like St. Joseph, Michigan, about $3,500 in Kalamazoo, and about $5,000 in Detroit or Chicago. Planning for a long life. Roccy argues joint life expectancy is badly overlooked, and that without a pension, most of your retirement income now has to come from your own savings. His example: a 55-year-old retiring at 65 runs out of money at 87 even with steady returns. Put 46% of retirement assets into a guaranteed income annuity and the assets last to 90, with more than $50,000 a year of guaranteed income after that. Add one 30% market drop the year before retirement and the original plan runs out nine years early; even with a 30% rebound the next year, it runs out at 82, because a 30% loss needs a 43% gain to recover. Roccy says today's income riders are the best he's seen in 30 years, with roll-up rates near 10% for up to 10 years and payout rates as high as 6.5% or more at 65. He also says Ken Fisher, while a great marketer, does consumers a disservice with his anti-annuity message, and repeats his view that fee-only advisors are his least favorite in the industry. Long-term care. Citing Genworth, Roccy puts 2025 nursing home costs at about $114,000 a year for a semi-private room and nearly $130,000 for a private room, projected to roughly $180,000 and $200,000 by 2040. He says about 68% of people 65 and older will be unable to perform two of the six activities of daily living at some point. He's not a fan of traditional long-term care policies because of large premium increases, and prefers asset-based ("combo") life insurance policies, some of which offer a 100% return of premium. He also mentions one policy on the market with an unlimited benefit, which matters most for dementia. Resources mentioned: Read 5 Pillar Asset Protection free, Roccy's book, which has a full chapter on estate planning. It's also in print on Amazon.Roccy's 19-page white paper on asset-based long-term care policies and his guaranteed income for life white paper, both mentioned as links "at the bottom of this video." Email roccy@thewpi.org for copies, a referral to an estate planning attorney in his network, or details on the unlimited-benefit long-term care policy.Disclosure: Roccy co-founded an insurance marketing organization and earns compensation on life insurance and annuity sales, including the income annuities and asset-based long-term care policies discussed here. He wrote 5 Pillar Asset Protection and earns on print sales, and his firm works with attorneys who prepare estate planning documents. His views on LegalZoom and other online form companies, Ken Fisher, fee-only advisors and traditional long-term care insurance are his own opinions; none of them has responded. Probate costs, attorney fees and product rates vary by state, provider and date. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

  4. Oct 15

    10 Roth Conversion Mistakes That Can Derail Retirement

    Most advisors treat a Roth IRA conversion as a no-brainer, and most consumers hear the same thing from the internet. Roccy DeFrancesco thinks that's wrong for most people. In this episode he walks through his Top 10 Roth Conversion Mistakes white paper: the ten errors he believes can cost you or your heirs tens or even hundreds of thousands of dollars. The 10 mistakes: Working with a bad advisor. Roccy says most CPAs and planners come up with conversion advice by guessing ("tax-free is better than taxable," "convert to the top of your bracket"), with free online calculators that take a handful of inputs, with homemade spreadsheets, or with industry software he believes isn't accurate. In his view the goal shouldn't be lower taxes, RMDs or IRMAA. It should be one thing: more money because of the conversion, and, secondarily, a better result for your heirs. He believes more than 85% of people who convert get a worse outcome.Converting without a full retirement plan. You can't know whether a conversion works without modeling income, taxes, investments, withdrawals and IRMAA over decades, and stress-testing market crashes and long-term care.Not understanding the lost compounding growth. Roccy calls this the number-one mathematical reason Roth conversions don't work. Every dollar pulled from a brokerage account or the IRA to pay the conversion tax stops compounding for the rest of your life and your spouse's life, and he says that loss usually outweighs the future tax savings.Ignoring IRMAA, the Medicare surcharge. Medicare premiums rise when modified adjusted gross income passes certain thresholds, based on your income from two years earlier. A conversion adds income instantly and can trigger it, often without warning, as a smaller Social Security check.Converting at the wrong time or with the wrong strategy. Converting during peak earning years stacks income on income. Converting too late leaves too few years for tax-free growth. Roccy says "fill up the 22% bracket" almost never works, and that tax equalization sometimes does but can still leave you with less.Misreading the RMD reality. Roccy argues required minimum distributions aren't evil. Large RMDs usually mean you got years of tax-deferred compounding, and you only pay tax on the withdrawal; the rest can be reinvested.Overestimating future tax rates. Most people's income drops in retirement. On his chart, the top rate has moved like a yo-yo for 70 years, but the effective rate for the average American has barely changed. He sees "taxes are going up" as a fear-based sales tactic. He also stresses that software must inflate tax brackets each year: on his slide, the 22% bracket starts around $101,000 of income in 2026 and around $191,000 by 2050.Failing to run long-term projections. A one-year snapshot, or a flat 5% return for 30 years, isn't how markets, expenses or life events behave.Ignoring the legacy impact. Under the 10-year inherited IRA rule, your heirs' results depend on their income (model $75,000 up to $1 million) and on whether they withdraw early or wait until year 10. Roccy says most software doesn't model the heirs' side at all.Converting without a qualified guide. Roccy admits this one is self-serving. His point: bad advice on a multi-year decision with dozens of variables can add up to significant damage.Red flags Roccy says to watch for: an advisor who focuses only on tax savings, can't explain or validate their numbers, uses a spreadsheet or generic software, never compares your total wealth with and without the conversion, or pitches a bonus annuity to pay the conversion tax (covered in episode 9). What a real process looks like, per Roccy: decide whether it's worth running the numbers, gather your full information, set your risk baseline, run the conversion scenarios, design recommendations only if they make sense, then review at least once a year. Resources mentioned: Download the free Top 10 Roth Conversion Mistakes white paper, the written version of this episode.Read Deconstructing Roth IRA Conversions: Myth vs. Reality free online, the book Roccy co-wrote with his daughter. It's also available in print on Amazon.Find a Roth Sherpa at rothsherpa.com, or contact Roccy at roccy@thewpi.org or 269-216-9978.Disclosure: Roth Sherpa is Roccy's own marketing platform, and the Certified Roth Conversion Specialist designation and the OnPoint software mentioned here were created by Roccy and his team. He co-wrote the book with his daughter and earns royalties on print sales. He also founded an insurance wholesale company that sells fixed products, including annuities. The 85% figure, the tax-rate chart and his views on CPAs, online calculators, industry software and other advisors are his own opinions and analysis. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

  5. Oct 8

    Should I Do a Roth Conversion? Why Most Don't Pay Off

    Everyone says a Roth IRA conversion is a no-brainer. Roccy DeFrancesco disagrees. After years of running the numbers, his view is that about 85% of the time a Roth conversion leaves the IRA owner with less money to spend while they're alive. In this episode he explains why, and when a conversion does make sense. Design for the right goal. Most advisors and CPAs build Roth conversion plans around three things: lowering taxes, cutting required minimum distributions (RMDs) and avoiding the IRMAA Medicare surcharge. Roccy thinks that's the wrong target. The only goal he designs for is more total money for the client. Lower taxes, RMDs and IRMAA are welcome, but not if they leave you poorer. How most Roth conversion numbers get run: by guessing, with a free online calculator, with a homemade spreadsheet, or with industry planning software. Roccy considers all four unreliable. He singles out Schwab's online calculator (fewer than eight inputs, compared with the 40-plus variables in the software his team spent two years building) and says that in his opinion even well-known programs like eMoney and MoneyGuidePro don't run accurate conversion numbers. The number-one reason Roth conversions don't work: lost compounding growth. A conversion doesn't happen in a vacuum. The tax has to be paid from somewhere, usually a brokerage account or the IRA itself, and every dollar used for the tax stops compounding for the rest of your life. Convert $100,000 a year from a $500,000 IRA and pay $20,000 a year in tax, and that's $100,000 gone over 10 years. Pay the tax out of the IRA and it gets worse, because the withdrawal is taxed too. Other mistakes Roccy covers: “Taxes are going up.” He calls this fear-mongering. Top rates have moved like a yo-yo for 70 years, but the effective rate the average taxpayer pays has barely changed, and it's lower still in retirement.Not moving the tax brackets. On his slide, reaching the 22% bracket takes about $101,000 of income in 2026 and about $191,000 by 2050. Software that holds your rate flat every year, he says, produces a flawed result.Assuming spending rises every year. A study of 280,000 retirees shows spending tends to fall with age. Less spending means less benefit from converting.Ignoring IRMAA. Medicare Part B and D premiums are means-tested on modified adjusted gross income, and a conversion can spike it.Not running a full retirement plan. You can't know someone's effective tax rate year by year without all of their income and expenses.The examples (Roccy's illustrations from his software): Couple, both 60: $750,000 IRA, $675,000 brokerage, $155,000 a year in expenses, converting $25,000 a year to age 79 at a 5% net return. The conversion saved about $67,000 in taxes and about $15,000 in IRMAA, yet left them about $62,000 less in total assets at 88. If they die at 85, it's about $206,000 less. At a 7% return they paid $101,000 more in tax and ended about $507,000 less. Add long-term care at $120,000 a year from 82 to 85 and they run out of money at 85.Couple, 60, $1 million IRA: about $85,000 more in taxes and about $209,000 less for themselves, but their heirs come out about $267,000 ahead after the 10-year inherited IRA period.Couple, 72 and 71: mostly cash savings, modest IRAs, $60,000 a year in expenses. Converting $25,000 a year left them about $101,000 ahead, and a 40-year-old child about $336,000 ahead. A rare win on both counts.Affluent couple, 68 and 62: $3 million IRA. Converting cost about $243,000 more in taxes and $1.1 million less in total assets for the couple, while their twin daughters would be about $401,000 ahead after 10 years, but only if they left the money alone. Roccy says a 35% market drop would likely turn the heirs' result negative.Takeaways: the size of your IRA doesn't decide whether converting works. What matters is where the tax money comes from, your age, your spending and your real life expectancy. Roccy warns that advisors who project to age 100 make conversions look better than they are. Conversions look much better when the goal is leaving more to your heirs, and he says that most industry software doesn't model the heirs' side at all. Pitches to watch out for: Roccy closes with three warnings: a bonus annuity to pay the conversion tax (covered in episode 9), cash value life insurance used in what he calls a convoluted way, and oil, gas or solar investments sold for the deduction, which he says turn out worthless 85% to 90% of the time. He also mentions Craig Wear, whom he calls his least favorite person in the industry. Roccy says Wear charges upwards of $12,000 for conversion advice, works only with people who have $1 million or more, and gives advice Roccy believes is inaccurate. Episode 3 covers that in detail. Resources mentioned: Read Deconstructing Roth IRA Conversions: Myth vs. Reality free online, Roccy's book with much more detail. It's also available in print on Amazon.Download the free Top 10 Roth Conversion Mistakes guide, a shorter, lighter version.Have your numbers run. Roccy's team will run your Roth conversion numbers. Contact roccy@thewpi.org or 269-216-9978.Disclosure: Roccy co-wrote the book mentioned here and earns royalties on print sales. He started the software company whose program runs the numbers in these examples, and his team offers to run conversion numbers for listeners. He also founded an insurance wholesale company that sells fixed products, including annuities. The examples are his illustrations from his software, with assumed returns, tax rates and life expectancies; your results will differ. His comments about Craig Wear, Schwab, eMoney, MoneyGuidePro and other advisors are his own opinions, and none of them has responded here. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

  6. Oct 1

    Lifetime Income Annuity: Guaranteed Retirement Income

    Guaranteed income for life is one of Roccy DeFrancesco's favorite products in financial services, and also one of the most polarizing. Some advisors love annuities with guaranteed income riders; others won't touch them. In this episode Roccy walks through how they work, runs the numbers on what they do for a retired couple, and explains why he thinks they make sense even for affluent clients who don't need the income. Who wants guaranteed income? Almost everyone, according to the surveys on Roccy's slides: more than 4 in 5 workers would be interested in a product that pays guaranteed monthly income for life from retirement savings (EBRI's 2026 Retirement Confidence Survey), 86% of Americans in a LIMRA study said guaranteed income provides peace of mind in retirement, and 92% of 401(k) participants want pension-like lifetime income (TIAA Institute). Income for life vs. guaranteed income for life: “income for life” is what most advisors offer: invest in dividend stocks and other assets and live off what they pay. Roccy's firm does this too. The problem is there's no guarantee. Guaranteed income for life comes from an annuity that contractually promises a payment every year, no matter how long you live. “Annuities aren't evil,” Roccy says. “They're just one tool.” Why income-for-life strategies fail: sequence of return risk. A big market drop right before or early in retirement can drain a portfolio you're withdrawing from. Roccy's slides list the S&P 500's maximum drawdowns: −19% in 2025, −25% in 2022, −34% in 2020, −46% in 2000–2002 and −59% in 2007–2008. And after a 30% loss you need a 43.33% gain just to get back to even. The example: a married couple, both 65, earning 4.5% net, with just enough money to last until 89. One −30% year, three years into retirement: they run out of money 8 years early.Same drop, then a +30% bounce the next year: still 4 years early.Put 50% of their money into a guaranteed income product (Roccy stresses 50% is only for illustration; the right share is case by case): at 89 they're projected to have $725,000 left, with money lasting past 95.With the income product and the −30% year: money lasts to 93. Add the bounce-back: to 97, with $416,000 at 89.How a guaranteed income rider works: these products track two values. Actual account value: your real cash, used for withdrawals, surrender and the death benefit. Roccy believes these annuities are designed to return roughly 4% to 6%. At 5% a year, $500,000 grows to $814,447 in 10 years.Benefit base: used only to calculate your lifetime income. Some products guarantee a compounded roll-up of around 8.5% (some 7%, one he's seen at 9.75%). At 8.5%, $500,000 becomes $1.13 million after 10 years, guaranteed from day one. It is not a walk-away value.Payment bands: the percentage of the benefit base you're paid each year. Many carriers pay roughly your age as a tenth of a percent, so 6.5% at 65; some pay 7.5% or more. The roll-up rate is the same whatever age you buy; the payment rate rises the older you are when you turn income on.Roccy contrasts that with old-school planning, which moved retirees into CDs, money markets and fixed annuities whose income depends on interest rates. Someone retiring in 2010 got close to nothing. With an income rider, you know your payment the day you fund it. Common questions: Death benefit? Yes: the actual account value, not the benefit base.Withdrawals? Yes. These aren't annuitization products, so the cash stays yours, but a withdrawal reduces your income payment. Most allow 10% a year free of surrender charges.Surrender charges? Typically 10 years, starting at 10% and dropping 1% a year. Don't buy one if you may need the whole sum within a few years.Cost? Typically 0.80% to 1.25% a year. Check that the fee comes off the actual account value; a handful of products charge it on the benefit base, which costs much more.When can income start? Immediately or any year up to about year 10 or 11; a few products roll up for 15 years. You don't have to choose when you buy. Roccy says some of these currently pay more than traditional immediate annuities.Married? A joint-life option pays until the second spouse dies. The roll-up is the same, but the payment band is usually about 1% lower. Roccy recommends it for most married couples.Why haven't you heard about these? In Roccy's opinion, some advisors are contractually barred from offering them (he names Northwestern Mutual as an example). Fee-only advisors can't sell commission-based products, which these generally are. And many advisors simply don't research them. He also rebuts the usual objections: “I can get you similar results in the market” (not with a guarantee), “why pay the insurance fee” (ironic, he says, from advisors charging 1% or more), and “they're illiquid” (partly true, which is why you only buy one for money meant to produce income). Roccy covers advisor conflicts in more depth in episodes 5 and 8. Should affluent clients use them? Roccy's answer: absolutely. Unless you have what he calls “stupid wealth,” you still hedge market risk in retirement, which usually means lower returns. Guaranteeing a large share of your income lets you invest the rest more aggressively. On his slide, over the 20 years shown, the S&P 500's compound annual growth rate was 11.11% against 8.09% for a 60/40 stock-bond portfolio, and $500,000 grew to $3.74 million versus $2.2 million. More for you, or for your heirs. Resources mentioned: Roccy's 27-page white paper, Guaranteed Income Products for the Affluent and the Non-Affluent, with more detail and examples. The video links to it; to request a copy, email roccy@thewpi.org.Get a quote for your situation, whether you want income now or in 5, 7 or 10 years: email roccy@thewpi.org or call 269-216-9978.Roccy's book Bad Advisors: How to Identify Them, How to Avoid Them.Disclosure: Roccy founded a registered investment advisory firm that, with its sister company, manages over $1 billion, and an insurance wholesale company that works with agents selling fixed products, including annuities. Guaranteed income rider products generally pay commissions, and his firms earn money when consumers buy through them. He also founded The Wealth Preservation Institute and OnPointe Software and wrote the book mentioned here. Statements about Northwestern Mutual, fee-only advisors and other advisors are Roccy's opinion; none has responded here. Roll-up rates, payment bands, fees and returns are general examples from his slides, vary by carrier and product, and aren't a quote or a guarantee for any product you might buy. Guarantees depend on the issuing insurer's claims-paying ability. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

  7. Sep 25

    Bonus Annuity to Pay Roth Conversion Tax? Why It Fails

    “Convert to a Roth with no out-of-pocket cost.” If you haven't seen that ad yet, Roccy DeFrancesco says you will. The pitch: buy an annuity with a 20% bonus and use the bonus to pay the tax on your Roth IRA conversion. Roccy believes it's a financial loser basically every time, and in this episode he walks through the math. Why everyone is talking about Roth conversions: there's roughly $40 trillion sitting in tax-deferred accounts — IRAs, 401(k)s and government plans — and advisors want to manage it. Roccy has no problem with advisors using Roth conversions to introduce themselves, as long as they run accurate numbers. His problem is with concepts he considers fundamentally flawed, and the bonus annuity is one of them. Fixed indexed annuities, the basics: No downside risk: market losses can't reduce your balance, and gains lock in every year.Tax deferral outside an IRA or 401(k), and some come with a guaranteed income-for-life rider.The trade-off is a cap on growth. A good non-bonus product might cap at 8% to 10%; Roccy says bonus products can cap as low as 4% or 5%. He thinks these products are designed to return 4% to 6%.How a bonus annuity works: put in $100,000 and the carrier adds, say, $20,000 up front, so you start at $120,000. But the bonus usually doesn't fully vest until the end of the surrender period (often 10 years), so you're effectively locked in. And most non-guaranteed caps can change every year. Roccy says the two main carriers used for this Roth conversion pitch both have a documented history of dropping caps. When Roccy thinks a bonus annuity can make sense: You're stuck with a carrier that keeps cutting your cap, and a bonus from a carrier that doesn't cut caps offsets your surrender charge.You want guaranteed lifetime income soon (you're 65, 68, 70) and the bonus boosts the income calculation.The sales pitch: “How would you like me to find you the money to pay the taxes on your Roth conversion?” Roccy walks through three social media ads built on that promise. One of them is from Roth Blueprint, which bills itself as “the Roth conversion experts” and shows Instagram's verified badge. Roccy calls the “expert” label and the badge disingenuous, since in his words a verified account says nothing about whether someone understands Roth conversions, and he says he believes the firm's numbers are inaccurate. The example: a 59-year-old with $500,000 in an IRA moves $350,000 into a 20% bonus annuity and gets a $70,000 bonus to “pay the tax.” The rest stays in the IRA, because surrender charges keep you from pulling the tax money out of the annuity. Why Roccy says the math fails (his slides, $100,000, the 10 years ending August 2026): Fixed indexed annuity with a 9% cap: averaged 7.14%, growing to $199,257, with no market losses along the way. Over the same period, he says the bond index returned less than 2%.Bonus annuity with a 5% cap, starting at $120,000: averaged 3.98%, growing to $177,295. The $20,000 bonus left you almost $22,000 behind, and that assumes the carrier never cut the cap.Keeping the money in a 60/40 portfolio: about $254,000. Fully in the S&P 500: about $354,000.Roccy's point: sold in a vacuum, a bonus sounds like free money. Compared honestly with the alternatives, he says it fails 100% of the time. Don't put the cart before the horse. Before anyone sells you a product, find out whether a Roth conversion even makes sense for you. After years of research and building software to run the numbers, Roccy's opinion is that conversions don't work about 85% of the time if the goal is to have more money while you're alive. The odds improve if the goal is leaving more to your heirs. Conversions can't be undone, so a bad recommendation can follow you and your heirs for years. He closes with a warning about self-described IRA experts, naming Craig Wear, whose Roth conversion advice he says can cost upwards of $12,000 and whose numbers he calls woefully inaccurate. Roccy covers that in detail in episode 3. His advice: interview any advisor about how they run Roth conversion numbers and what software they use. Resources mentioned: Read Deconstructing Roth IRA Conversions: Myth vs. Reality free online. Roccy wrote it with his daughter Lauren. It's also on Amazon, about $24.95 in print or $9.99 on Kindle.Download the free Top 10 Roth Conversion Mistakes guide, a shorter, lighter version of the book.Find a Certified Roth Conversion Specialist (CRCS), the certification Roccy's team created. If you're getting Roth conversion advice from anyone, he suggests making sure they hold it.Have your numbers run. Roccy says his team can run your conversion in under 10 minutes in their OnPointe software. Contact roccy@thewpi.org or 269-216-9978.Disclosure: Roccy founded an insurance wholesale company that works with more than 650 agents nationwide selling fixed insurance products, including fixed indexed annuities. He says that if the bonus annuity math worked, his agents would be selling it. He also wrote the book mentioned here, runs the OnPointe software used to run conversion numbers, and his team created the CRCS certification. His firms earn money when consumers come to them for help. Every characterization of Roth Blueprint, Craig Wear, Ken Fisher and the carriers behind these products is Roccy's own opinion; none of them has responded here. Returns come from his slides, reflect particular products and a particular 10-year period, and aren't guaranteed for any product you might buy. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

  8. Sep 17

    Fee-Only vs Fee-Based Financial Advisor: Which Is Better?

    Fee-only advisors market themselves as the least biased advisors in the industry. Roccy DeFrancesco argues the opposite: he believes they are the most biased — against every product that pays a commission. This episode walks through his Fee-Only Advisors: The Good, the Bad, and the Ugly presentation, drawn from chapter six of his book Bad Advisors. What “fee-only” means: Fee-only advisors are paid only by their clients — usually an up-front planning fee and then a fee on the assets they manage. They can't accept commissions, so they can't sell life insurance, annuities, long-term care or disability coverage.Their trade group, the National Association of Personal Financial Advisors (NAPFA), requires members to work only within the fee-only model. NAPFA describes the model as the most transparent and objective way to pay an advisor, one that minimizes conflicts and ensures the planner acts as a fiduciary.Roccy says he has no problem with how they charge. His problem is the implied message: that any advisor who earns a commission is biased and can't be trusted.Roccy's case against fee-only advisors: “Fee-only” is marketing. Roccy says many fee-only advisors have told him privately that they chose the model because clients like it. He compares the pitch to a loaded question: would you rather work with a biased advisor or an unbiased one?No incentive to learn commission-based products. If an advisor can't earn anything on a product, Roccy asks, why would they learn it — or keep up as carriers change designs every month? He estimates there are around 300 fixed indexed annuities on the market.“Fiduciary” is a given, not a selling point. Speaking as an attorney, he notes every attorney and CPA is a fiduciary and doesn't advertise it. In his view, plenty of fiduciaries give bad advice and plenty of advisors who aren't fiduciaries give good advice.Referring clients to an insurance agent works against them. His example: a client with a $1 million IRA who would benefit from putting $500,000 in an annuity. Referring that client out cuts the fee-only advisor's revenue in half. Roccy says he has never seen it happen in more than 25 years.No-load products are thin. He says insurers have tried selling no-commission products directly to consumers and failed, because nobody is out there selling them. Most of the good products, in his view, pay commissions.The commission-based products Roccy says every advisor should know: Fixed indexed annuities. Market losses can't reduce your balance, and gains lock in each year up to a cap. Roccy puts realistic returns at 4% to 6%. His slide compares 10 years of a 9% cap product at about 7.14% (in a strong market) with a bond index at about 1.37% that dropped as much as 17% along the way. He says fee-only advisors typically use bonds to hedge market risk instead.Guaranteed income riders. His example: a couple aged 55 and 54 put $500,000 into an income rider annuity and wait until age 66. The guaranteed joint lifetime income is $161,948 a year — an 8% roll-up rate and a 7.1% payment rate. A single 55-year-old gets $172,714, a 7.6% payment rate. He says these products are better now than they've been in 30 years.Indexed universal life (IUL). Market losses can't reduce your cash value, gains lock in, the cash grows tax-free and can come out tax-free, and there's no age 59½ rule. He suggests waiting 10 to 15 years before tapping the cash, and calls IUL a viable option for certain clients under 55. His slide shows a 12% cap product averaging over 8% for the last 10 years.Long-term care. Private-pay nursing homes run about $120,000 to $125,000 a year today, Roccy says. Options include traditional policies, asset-based long-term care with a return-of-premium rider, annuities with long-term care benefits, and the Immediate Care Plan for people already in a nursing home (covered in episode 6).Disability, life insurance and final expense coverage.What Roccy recommends instead: a fee-based advisor. A fee-based advisor can charge a fee to manage your money and sell commission-based products when they fit. They're also fiduciaries. Roccy thinks they're far more likely to recommend these products when appropriate, and calls the worry about their incentives “hollow,” since they earn a management fee either way — sometimes more than a commission. Questions to ask your advisor: Are you a fee-only or fee-based advisor?Do you help clients with long-term care solutions?Do you know what a fixed indexed annuity is?Do you know what an indexed universal life policy is?Do you regularly research these products to stay current on the best ones?Have you ever recommended them to a client?Would you recommend one to me if you thought it was the best way for me to grow wealth while protecting it?Roccy's advice: if the answer to the first question is “fee-only,” walk away. And even with a fee-based advisor, ask the last two questions — many know the products but never use them. Resources mentioned: Roccy points to “the link at the bottom of this video” for his 24-page white paper, Income for Life for the Affluent and the Non-Affluent. For audio listeners, email roccy@thewpi.org to request a copy.Download Bad Advisors free at badadvisors.com. Chapter six covers fee-only advisors.feeonlyadvisors.net — Roccy's consumer site on why he believes people should avoid fee-only advisors.Free second opinion. If you're using or considering a fee-only advisor, Roccy offers to review their recommendations and says he usually doesn't charge for it. Contact roccy@thewpi.org or 269-216-9978.Disclosure: Roccy is an attorney, financial planner and insurance agent. He co-founded an insurance marketing organization that earns money when independent agents sell life insurance and annuities, and his firms run a registered investment advisory business that charges asset management fees. He also runs feeonlyadvisors.net. Every characterization of fee-only advisors and NAPFA in this episode — including calling fee-only advisors the most biased and least knowledgeable in the industry and comparing the fee-only community to a cult — is Roccy's own opinion. Returns and income figures come from his slides, reflect particular products and time periods, and aren't guaranteed for any product you might buy. NAPFA hasn't responded to these claims. Nothing here is legal, tax or investment advice. Questions, or a topic you want covered? Reach out.

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About

Roccy DeFrancesco is a "recovering attorney" who puts popular financial advice on trial. Each episode, Roccy — founder of The Wealth Preservation Institute and author of over a dozen books on asset protection and wealth preservation — breaks down the claims made by big-name financial personalities like Dave Ramsey, Suze Orman, and Ken Fisher, and shows you the details they leave out. Topics include annuities, indexed universal life insurance, whole life insurance, 529 plans, estate planning, and how to spot a bad advisor before they cost you. Sourced, on the record, no sales pitch — just the numbers most advisors won't show you. New episodes weekly. Subscribe and see for yourself.

Information

  • Creator
    Roccy DeFrancesco
  • Years Active
    2026
  • Episodes
    14
  • Rating
    Clean
  • Copyright
    © 2026 Roccy Knows
  • Show Website
    Roccy Knows