Complaint Review: Alexandra Sanchez/Tenacity Financial

I don't know the person you all are talking about so I have no comment about that. I can proudly tell you that my corner of the WFG world is filled with high integrity caring generous financial professionals who emphasize a spirit of service, doing right by our clients, and doing right by our team. In any case, I'm responding to the general comments made about IULs.

IUL: Life-Changing Wealth Builder or Soul-Crushing Money Destroyer?

They can be both actually, it all depends on whether an IUL’s super powers are used for good or for evil. IULs have a bad reputation for having high fees and not performing as advertised. Even though IULs are not actually flawed in this way, for all practical purposes they are, because when IULs are not structured and funded properly, as many aren’t, they easily live up to their bad reputation.

A 100% efficient IUL design for max accumulation would typically be one where Premiums are set at Guideline Annual Premium/Guideline Level Premium. Unfortunately designing an IUL properly reduces the agent commission so there is a mis-alignment and disincentive which I believe compounds and perpetuates the problem. Nationwide to their credit has attempted to counteract this by adding a “1st Year ETP Threshold” which increases Target Premium by around 10% if Premiums are at or above the ETP. With this they are incentivizing agents to design efficient IULs that are funded properly where Premiums are close to Guideline Annual Premium level. I applaud and admire Nationwide for this but unfortunately it’s probably not going to touch sides.

The bad news for us at WFG is that although this is an industry-wide problem, Transamerica as the top IUL company and WFG as the top IUL distributor together are assigned the majority of the blame.

The good news is that while we agents all work towards IUL mastery there’s something quick and easy that anyone at any skill level can do to audit their IUL designs and detect potential design problems. You may not know how to fix the problem yet, but at least you’ll know that there is a potential problem, giving you the chance to seek help and fix hopefully before locking the client into a poorly designed IUL that won’t perform in the amazing way that it can and should. I think that adding a simple and easy audit step like the one below to the business process might have a significant positive effect. What do y'all think? 

IUL Audit Checklist
1. 1 or more 0s in the Cash Surrender column is a red flag.
2. 15 x Guideline Annual Premium not equaling Total Premiums Paid at year 15 is a red flag.
3. If it takes longer than 6 or 7 years for Policy Value to be larger than Total Premiums Paid it’s a red flag.
4. If premiums are paid for longer than 5 years and DB is Level instead of Increasing or Optimal Switch it’s a red flag.

5. If the policy lapses (non-guaranteed) before age 120 it’s a red flag.

If you see any of these red flags and aren’t sure how to fix it please ask a trainer for help.

And that, Dearly Beloved, is how, by adding a small and seemingly insignificant audit step to our business process, we just might be able to turn a liability into an asset and together change an entire industry for the better. :)

On its face, what your agent told you about the IUL sounds totally correct, namely that an IUL provides tax-free accumulation, tax-free access to your cash value at any age via policy loans, and tax-free transfer to your beneficiaries. To retain these tax advantages your policy cannot lapse and your policy cannot become a MEC (modified endowment contract).

In an IUL you can always withdraw up to the basis tax-free. But to access the earnings in an IUL tax-free you would have to withdraw the cash as a policy loan.

I've included some tax info below as well as info on the different types of policy loans. I hope this is helpful.

TEFRA, DEFRA, TAMRA, and 7702

TEFRA, DEFRA, TAMRA, and Section 7702 of the Internal Revenue Code all play significant roles in shaping the tax treatment and benefits of Indexed Universal Life Insurance (IULs).

TAMRA (Technical and Miscellaneous Revenue Act of 1988): TAMRA's impact on IULs was substantial as it facilitated tax-free policy loans, tax-free withdrawals up to basis, and tax-free growth of cash value.

Section 7702: Section 7702 of the Internal Revenue Code defines the requirements for maintaining tax advantages in life insurance policies, including IULs. Compliance with Section 7702 ensures tax-free transfers of death benefits and tax-free access to cash value growth via policy loans or withdrawals.

TEFRA (Tax Equity and Fiscal Responsibility Act of 1982): TEFRA introduced the Modified Endowment Contract (MEC) rules, imposing limits on premiums within IULs based on the death benefit and policyholder's age. Exceeding these limits results in less favorable tax treatment.

DEFRA (Deficit Reduction Act of 1984): DEFRA established requirements for the death benefit to remain proportional to premium payments (Corridor), ensuring that IULs maintain their status primarily as insurance vehicles and not tax shelters.

3 Ways To Access Your Money In An IUL

1. The Sad Way – Death. Best Tax-Advantaged ROI but not recommended because you can only do it once and you have to die.

2. The Bad Way – Cash Withdrawal. Cash Withdrawals up to the basis is Tax-Free, but any withdrawals beyond the basis (Earnings) is taxed as ordinary income. Withdrawals pull your money out of the IUL where it’s no longer working for you earning interest.

3. The Good Way – Zero Net Loans a.k.a Wash Loans a.k.a. Standard Loans provide Tax-Free distributions of Cash Value and Earnings but these loans pull your money out of the IUL where it’s no longer working for you earning interest.

4. The Advanced Way – Loans that use Leverage. These Variable Loans a.k.a. Alternative Loans a.k.a. Index Loans a.k.a. Participating Loans provide Tax-Free distribution of Cash Value and Earnings AND the money you borrow stays in your IUL where it continues to work for you earning interest. This type of loan DOES inject some risk into an otherwise very low-risk investment because you still have to service these loans even when there’s no gain for the year.

• Borrow money from the Insurance Company using your Cash Value as a guarantee. The interest rate for these loans is usually around 5% or 1 or 2 points above the Fixed Interest Rate.
• The money you borrow stays in your IUL working for you and earning interest and the idea is that if you’ve chosen your Index Allocations well you’ll make profit via arbitrage.
• Note that in zero gain years the Index Loans must still be serviced, which injects some risk into what otherwise would be a very low-risk investment, for example a string of consecutive zero gain years while carrying a large Index Loan balance could be problematic. Therefore it is important to have risk mitigation safeguards in place such as 1) Set limit on Index Loans to not exceed a max of 80% of Cash Value, 2) Be prepared to convert Index Loans to Zero Net Loans if necessary, and 3) Perform proactive Index Allocation Rebalancing to try and reduce the number of zero gain years encountered.

Tenacity Financial (aka Tenacity Financial Services) is a branch office under World Financial Goup (WFG).  The parent company of WFG is Transamerica.  Transamerica is similar to offices like Synergy Financial, Diamond Financial, Lighthouse Financial, and other WFG offshoots.

Jay Gauthier Jr. and Ronnie Gauthier run Tenacity Financial.  If you ended up at Tenacity Financial it's because someone invited you to a Business Presentation Meeting (BPM) (aka Money Seminar, Opportunity Meeting) using a scripted text.  Maybe it happened at the Mall, restaurant, or any public place, or you're a friend/acquaintance/family member thinking you'd only support that person.  Wrong.

I'm not going over the MLM structure -- someone else already did that.  Here's the money scam that Jay Jr. operates.  You'll end up paying through the roof.  Your signup fee (sorry, I meant to say "background investigation check") is $100.  Your monthly membership depends on your seniority level -- $25, $50, $100+.  You're expected to pay for seminars, bootcamps, quarterly events, annual events etc -- $25-400 per case.  Guess what: That's all in CASH.  Nice.  Not traceable.  The IRS loves that.

Jay tells you it's all small fees so you have some skin in the game.  There's more: You're expected to have your own office in his leased Tenacity building -- $400-$800 per month.  CASH.  Nice.  First, Jay gets the tax credit for his business expense (office lease).  Then, he gets YOUR office rent money all CASH.  Double-dipping.

Jay's overhead is zero because you pay for him.  By the way, you only advance in his pyramid, moving from Marketing Director to Senior Marketing Director, if you have an office and an assistant.  The assistant?  Jay tells you to find your own assistant and pay him/her $100 a week.  So much for LABOR LAW.

My advice: Go with a REAL financial firm if you want to be in financial services.  I found out that others DON'T charge for office rent, phone use etc.  Jay Gauthier Jr. and Tenacity -- SCAM!

Jay and Ronnie Gauthier run Tenacity Financial. That's not even the real name. Jay incorporated as Team Tenacity in 2018. Team Tenacity is under World Financial Group (WFG). His agents claim to be financial advisors, leadership builders, Women Empowerment Leader (example: Alexandra Sanchez) etc.

Alexandra is a life insurance agents trying to recruit people to her MLM because Jay told her so. Jay's agents go out loaded with scripts to recruit on the street, at malls, at gas stations, on Instagram, on Facebook -- about anywhere. You'll get talked into a Business Presentation Meeting (BPM). At times, agents refer to that as Opportunity Seminar, Money Seminar, Financial Education Seminar etc. All the same.

You'll hear about making tons of money, how dumb regular emloyees are, and why you should do the MLM pyramid. You'll pay $100 for a background check. There's no background check actually. The money pit doesn't stop there. Jay will talk you into getting an office in his leased building. That's $400-$800. You'll also pay for conventions. boot camps, seminars, monthly membership fee, and more. None of it is cheap! And, Jay wants all CASH. The IRS knows nothing about this. Jay has no overhead actually because YOU pay for him.

Alexandra is one of his life insurance agents. She tells you you'll learn everything about money. In fact, you learn nothing. You'll fork over a Top 25 list -- contact info for your friends and family -- for training appointments. Well, reality is, she wants to sell life insurance to your inner circle and have them jump on board. Jay preaches internal consumption. Sell to your recruits and their families.

You'll learn nothing about money. You'll only sell expensive Indexed Unviversal Life Insurance (IUL) from Transamerica. Do your research about IULs. Alexandra Sanchez doesn't even tell the truth. No one at Tenacity Financial knows how the IUL really works. They run around with false information. Worse yet, Jay doesn't provide any legal updates. Thus, no one knows about changes to simple things like the IRA.

Alexandra Sanzhes, Tenacity Finacial, Jay Gauthier and other agents like Elias Castro, Elson Mills, Frank Vidal, an on and on and on -- all part of Jay's MLM scam. Do yourself a favor, stay away. If you join WFG, it'll absolutely ruin your existing friends/family relationships. You'll go broke.

One last word about Jay's training sessions. They're weekly. What you learn has nothing to do with the financial world. He'll tell you over and over again what a stud vs. a dud looks like, recruit, recruit, and recruit, and how much money he made in the last pay cycle. Beware: All financial records he shows are not real. They're his WFG commission reports. No real tax return information.