TITLE

The Enemies of Capitalism

AUTHOR(S)
Cordell, David M.
PUB. DATE
January 2003
SOURCE
Journal of Financial Planning;Jan2003, Vol. 16 Issue 1, p42
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article presents the author's view on capitalism in relation to financial planning in the U.S. The life insurance industry has successfully used single premium whole life insurance to their advantage. In fact it was so good that companies and agents pushed it hard enough to garner the attention of those fine people who make decisions about the tax code, and all of a sudden there was something called a modified endowment contract blocking the sale. Concurrently, life insurance agents started branching out into securities sales and financial planning. Sales of limited partnerships became a significant source of income, and many life insurance companies, through their securities arms, were heavily involved. Well, as luck would have it, although luck really had nothing to do with it, limited partnerships did not work out as well as anticipated. Many were unconscionably loaded in favor of the general partners, and the majority had economic value only because of the tax advantages. The tanking of the real estate market did not help either. Then the inevitable occurred. Our friends in Washington decided in 1986 to change the tax laws, and most limited partnerships turned into something you would not want to step in. And in 1992, financial analysts were still reeling from criticism for not catching on to the Enron shenanigans. Things became clear to me. These things happened because we believers in capitalism allowed them to happen.
ACCESSION #
8841338

 

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