Creative Destruction and the Financial Services Industry

By Doug Andrew, Emron Andrew, and Aaron Andrew


Status quo. It’s a term for “the existing state of affairs,” or the way things have always been.
As a general rule, mankind tends to stick to the status quo. We follow along known paths.

We stay tucked inside our comfort zones. Even if our “existing state of affairs” isn’t the best, we often go with the flow because change requires action, ingenuity, and sometimes outright courage.

But if there’s a better way, why not challenge the conventional thinking?

Thankfully, that’s what abundance-minded people have dared to do throughout history.


Looking back in time, for millennia there was no reliable way for mankind to fight even the simplest of infections. A small scratch could turn to infection, which could abscess, and ultimately lead to death.

The same held true for pneumonia, rheumatic fever, and countless other infectious illnesses. Doctors could only stand by and hope for the best—that is until penicillin came along, thanks to an accidental discovery by Alexander Fleming, a British professor of bacteriology.

But it took more than Fleming’s moldy petri dish in 1928 to start saving lives. Over the next two decades, it required the work of experts in Great Britain and the US conducting extensive research to develop, produce, and distribute penicillin as treatment.

The advent of penicillin ushered in the era of antibiotics, which changed the course of modern medicine in many ways. But it wouldn’t have happened without people who were dissatisfied with the status quo, people who saw patients dying and thought, “We can and we must do better.”

The same has held true for most major advancements in medicine, transportation, agriculture, technology, and even commerce.


Take the automobile, for instance. During the late 1800s, the Germans and French honed the blueprint for the modern automobile, but it wasn’t until Henry Ford wondered if there were a better way to mass-produce cars that the world really started moving.

Steve Jobs was another example of challenging the status quo. He didn’t invent the cell phone. He just made a better one.

In addition, he created one of the most popular cell phones and platforms used worldwide—advancements that have spawned millions of apps.

Likewise, Jobs didn’t invent the MP3 player. But when he saw the technology, he dared to wonder what would happen if Apple could put thousands of songs in everybody’s pocket.

At the time, the music industry viewed him as a threat. They resisted his idea that people could download individual songs on iTunes for a nominal fee.

While the doubters were busy being scarcity-minded, Jobs started a revolution in the industry—one that continues today with streaming services like Spotify.


And just look at today’s game changers in the entertainment industry.

Blockbuster built an empire of video rental stores, dwarfing mom-and-pop shops and larger competitors.

But then others dared to question the rental store model, and along came competition with things like Netflix’s DVD shipping model and that pervasive little kiosk, Redbox.

For nearly three decades, Blockbuster had been a video rental titan with as many as 9,000 stores worldwide, but it drifted into history, replaced by ever-advancing entertainment technology. Now streaming services like Netflix, Amazon, and Hulu are dominating.

They are not only disrupting the way people get their entertainment, but entertainment itself, launching their own series and movies that rival the best programs on traditional networks, cable channels, and movie screens.


This same principle has also played out in the travel and lodging sector. When it comes to booking lodging, people used to visit with their travel agent, who made the hotel arrangements on behalf of their clients.

The internet paved the way for hotels and travel sites like Expedia and Trivago to empower travelers in booking their own hotel stays. With further innovation, sites like VRBO and Airbnb have given travelers even more options, bypassing the hotel chains and empowering people to stay in private condos, homes, or timeshares.

The examples go on and on—including things like long-established taxi companies competing with Uber and Lyft as the “sharing economy” transforms our world.

Suffice it to say that the status quo is not always necessarily the best. When pioneers in any area of life dare to explore new routes, it opens the way for others to thrive along better paths.

These pioneers are engaging in something called “creative destruction,” a term credited to Austrian American Economist Joseph Schumpeter.


In 1942, Schumpeter published a work, Capitalism, Socialism, and Democracy, in which he pointed out that creative destruction, was a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

Essentially, he was pointing out this cycle of something newer killing off and replacing something older.

The financial services sector has benefited from its share of creative destruction. At one time, the only options to preserve your wealth were to bury it in the ground, lock it up, or put it in the bank where it could earn nominal interest.

Over time, other financial vehicles emerged—CDs, money market accounts, and qualified investments like IRAs and 401(k)s. Each of these vehicles has offered Americans a new path to accumulating wealth and saving for retirement, but they have their limitations.


In 1980, E.F. Hutton caused another wave of creative destruction when the stock brokerage firm introduced a special kind of insurance policy that could provide a death benefit along with other benefits: cash accumulation, liquidity, safety, predictable rates of return, and tax advantages.

Despite its existence for more than three decades, this revolutionary policy is something relatively few financial experts know about—let alone understand how to properly structure and fund.

And even though it has become one of the most valuable financial vehicles for thousands of successful people across the country—helping Live Abundant’s clients get through the Great Recession without losing principal due to market volatility (and many of them even saw significant gains)—it’s a strategy that is often misunderstood and even maligned.

But we ask, “Just because all the dogs may be barking up other trees, does that make those the right trees?”

We’d rather catch the prize—a brighter financial future—in whichever way is best. In fact, that’s what led us to where we are today, one of the nation’s pioneers in suggesting a balanced approach to financial strategies that includes incorporating what we call The LASER Fund.


We’ve been called creative disruptors for leading this charge. It’s a role we’ll gladly accept, because our path to developing these strategies has been hard-earned.

These principles were borne out of the crucible of real-life experiences that proved to be turning points, defining moments that have benefited our clients, and even ourselves. We started this movement in the 80s, with Doug Andrew paving the way.

These concepts garnered major national attention with the advent of Doug’s first book in the early 2000s, Missed Fortune. From there, our team at Live Abundant taught thousands of financial services professionals these powerful strategies.

Today, our strategies have gone on to help transform entire segments of the financial services and insurance industries—as well as countless lives.


Even when something good comes along in any aspect of life, you often see people clinging to the same old premises. They hold on to concepts or practices they’re familiar with, simply because they tend to equate familiarity with comfortability.

And we humans like to stay within our comfort zones.

The same holds true in financial planning. There are many principles that people adhere to, even though in actuality they’re just myths, such as:

  • Choose only tax-deferred financial vehicles because you’ll be in a lower tax bracket when you retire.
  • Keep all your money in the market. If you’re losing significant amounts, just stay in there, and you’ll come out ahead.
  • The best way to get out of debt and get ahead is to send extra principal payments to the mortgage company to pay off your mortgage as soon as possible.
  • During retirement, the best way to save on taxes is to stretch out your IRA or 401(k) as long as possible by taking Required Minimum Distributions (as required by the IRS).

Doug’s comprehensive best-selling books explain why these and other myths simply aren’t true. All three of us shared these principles in our book, Millionaire By Thirty, illustrating how other financial vehicles can provide more critical advantages than the traditional ones.

Doug explores these strategies during his national weekly radio show. And our Live Abundant team delivers these principles at our regular seminars and full-day events.


Why all this effort to help people learn, and let go of old ways of thinking? Because we don’t believe in just selling financial products—we believe in empowering people to understand these concepts for themselves so they can make informed decisions.

In fact, we often won’t meet with potential clients until they’ve first attended one of our educational events. This is to help them determine for themselves if this is a path they’re interested in—and if they’re self-disciplined enough to take it.

Our clients actually get involved in their financial strategies. While we see our role as being their guides, we invite our clients to see themselves as competent partners in the process, taking personal accountability and responsibility for their finances, as well.

Because there is at least some element of risk in virtually all financial vehicles, our clients are encouraged to do the homework necessary to gain at least a fundamental understanding of financial principles and strategies so they can make decisions for their individual situations.


Our financial professionals lead them through an 8-Step True Wealth Transformation process. The first step is the Enlightenment Experience, where clients learn the ins and outs of how to incorporate a blend of strategies.

Throughout the 8-Step process, most of our clients invest hours in studying these principles. This way they gain essential knowledge to move forward and have the opportunity to reap the rewards these strategies provide.

Taking this kind of personal ownership for one’s financial path corresponds with Marshall Thurber’s principle of “dealing above the line.” Marshall Thurber, the revolutionary attorney, businessman, author, and educator (and personal friend of Doug’s), explains that we must avoid living “below the line,” dwelling in blame, shame, and justification.

Instead we should live above that line, taking accountability and responsibility for our lives. When it comes to finances, this essentially means it’s wise to partner with your financial professionals, essentially becoming “fiduciaries” together so you can take responsibility for your future.


Now the term “fiduciary” has become a hot button topic in ongoing legislative debates related to the future of the financial services industry.

According to “The Free Dictionary,” as an adjective, fiduciary means, “of or relating to a duty of acting in good faith with regard to the interests of another.” As a noun, it means “a person bound to act for another’s benefit.”

Far too many Americans would rather turn the entire responsibility for their financial future over to their financial professional, essentially making the professional the sole fiduciary.

They would rather assume their financial professional knows everything there is to know and is selecting optimal strategies for them—and all they have to do is sign on the dotted line and hope for the best. If anything goes south (which with market volatility, economic storms, rising taxes, and inflation, things often do), they want to be able to blame and penalize their fiduciary financial professional.

How much greater is it to take ownership of your own finances, gain an understanding for yourself, and then partner with like-minded financial professionals to pursue best-possible strategies that incorporate the three marvels of wealth accumulation.


Stop and think: who has the biggest stake in your abundant future? You! Who has the most to gain or lose when it comes to the strategies you select? You!

So why wouldn’t you want to know more, understand more, and have more control?

We’d like to empower as many Americans as possible to stand up and take ownership for their own brighter days ahead. That’s what our company’s mission is about.

We encourage you to get in motion, now. Not five years from now. Not ten years from now.

Wherever you are in your journey toward retirement, you can never start too early—or too late—to adopt better strategies. We’ve helped thousands of clients break away from the herd and achieve better outcomes using The LASER Fund.


For decades, we’ve been blazing this trail, but industry trailblazers often have arrows in their backs. As one of the first to introduce these strategies, we’ve taken criticism and skepticism for years, but it’s interesting to note that now others realize the path we’ve helped illuminate is better.

We’re seeing a migration in America’s financial sector. More financial professionals are turning to the strategies we’ve been helping clients with for decades. What was once a chorus of naysayers has become a group of like-minded professionals.

In his popular series on creative destruction, nationally renowned Strategic Coach Dan Sullivan (a personal friend of Doug’s) has cited the impact Doug and Live Abundant have had in the industry by saying:

“Many of our previous industry transformers have continually focused on specific clientele within a specific market. Over a period of time, they are able to continually deepen their value of creation. Doug Andrew started off on his path, with his unique process, the True Wealth Transformer, focusing on helping his own clientele maximize their wealth creation opportunities. It wasn’t long, however, before many other advisors began asking Doug to teach them how to transform their practices in the same dramatic fashion as he had his own. It was not too long after he began helping thousands of financial advisors to transform their practices that representatives from other financial subservices sectors made the same request.”

The ripple effect of our work is also seen in the growth of a sector of the insurance industry that provides one of the primary financial vehicles we recommend. After Doug started teaching other financial professionals and agents across the nation to utilize this vehicle, some of the country’s largest brokerages saw a significant increase in the volume of these policies.

And according to industry leaders like LifePro, over the past ten years, the industry has seen an average growth rate of nearly 20% year-over-year on these policies.

As the leading company in the US to recommend these strategies, many of the nation’s top insurance institutions now consult with our team at Live Abundant when updating their offerings—even flying their executive teams out to our Salt Lake City offices to meet with us in person.

These are multibillion-dollar companies in a multitrillion-dollar global industry, with stellar track records we’re proud to recommend.


Often by the time people come to us, they’ve lost money in the market. They realize during retirement that they’re in a tax bracket that is as high or higher than during their working years.

Their finances are essentially in Stage IV cancer. While we can often offer the right “treatments” to help them secure a healthier financial future, how great would it have been if they’d taken advantage of prevention rather than seeking a cure?

How much better is it to change out the oil regularly than replace the entire engine?


Many people don’t realize how the reality of retirement can play out.

Let’s look at a quick illustration. Let’s say you’re thinking that in retirement, in addition to other sources of income (pension, Social Security, rental income), you want to pull $3,000 a month out of your 401(k) to cover the extras (travel, medical, charitable giving).

That’s $36,000 a year.

Now, do you know how much would you have to pull out of an IRA or 401(k) every year to net $36,000?

It’s not $36,000. Those dollars inside your 401(k) are pre-tax dollars, so once you withdraw them, it’s time to pay taxes. And because you’re in a 27% tax bracket, you would need to withdraw almost $50,000 to cover the $13,500 in taxes to finally end up with that $36,000 you wanted (a 27% tax bracket is comprised of a 22% to 24% federal tax bracket for incomes over $75,000, and a 3% to 5% state tax bracket).

Let’s look more closely at that: $50,000 is 4% of what?

It’s 4% of a $1,250,000 nest egg.

If you’re anything like us, we’d be frustrated having accumulated a nice big $1.25 million nest egg, only to be enjoying a measly $3,000 a month from the account during retirement.


But that 4% is consistent with what traditional financial professionals recommend you take every year. In the industry, it’s called the 4% rule, something promoted by many “crowd-following” financial professionals who encourage clients to withdraw only 4% a year from their accounts.

(The thinking is this will help clients avoid outliving their money during retirement. However, it’s important to note that even the 4% rule has come into question within the last few years. Recent analyses and articles show that it may fail in preventing a good portion of retirees from outliving their money, due to market volatility and longer life expectancies.)

We believe it’s possible to enjoy a 7% payout a year, on average—tax-free (we illustrate this in our book, The LASER Fund).

This would mean with a $1,250,000 nest egg, you could be pulling out more than $87,000 a year to live on—again, tax-free. That’s over $7,000 a month, which is more than two times what you would be getting from your IRA or 401(k) in this example.

So we beg the question: would you like access to more or less money when you need it most?

We’re guessing your answer is more.


This is an excerpt from The LASER Fund

DISCLAIMER: With any mention of The LASER Fund, maximum-funded tax-advantaged insurance contracts, or related financial vehicles, let it be noted that life insurance policies are not investments and, accordingly, should not be purchased as an investment.