Imagine an account that

Lets you retire 100% tax-free

Is NOT reportable to the IRS
Pays you an average of 5% per year
Has paid out, on average, for 121 straight years
And which, unlike traditional retirement plans like IRAs and 401(k)s, lets yo
u withdraw money anytime you like, for whatever reason you like, and with no pen
alties whatsoever.
That s what Tom Dyson and a few other folks who sign their promo letters are promi
sing in the latest pitch for the Palm Beach Letter, which he publishes with Mark
Ford. It s all about an account that s been used by the uber-wealthy for generation
s, and by at least six different U.S. Presidents, including John F. Kennedy and FD
R, whose pictures grace some of the ads to provide gravitas, to generate IRS-exem
pt income for retirement.
So what s the story? Well, Dyson calls it the 770 account to make it seem mysterious
(why else, of course, would you buy the newsletter?), but, frankly, it s plenty m
ysterious on its own even if you don t give it a sneaky name. More on that in a mo
ment.
In fact, this kind of Account is already being touted by lots of skeezy-sounding i
nfommercials and books whose promises make you very suspicious they come with na
mes like Bank on Yourself and Infinite Banking.
That s not to say that any of the heavily marketed versions of these plans are ske
ezy, just that their promises give me that feeling, and the numbers and specific
s for plans like this come usually only when you re sitting in an office with an a
gent. Skeezy , by the way, is defined by your friendly neighborhood Gumshoe as a co
mbination of sketchy and sleazy.
But what they re talking about with those plans, and what Tom Dyson is pitching fo
r his newsletter, is life insurance.
Not just ordinary term life insurance like most people under 60 carry, though
l get to that in a minute. First, a bit more of his tantalizing teasing:

we l

Manhattan s Secret Vault: Why Wall St. has kept this powerful secret hidden fro
m you
There s a very good reason you ve never heard about the

770

account before:

That s because Wall Street doesn t want you to know about it!
And neither do the big banks too, for that matter. (More on this in a minute.
)
Now, even though this is the investment account The Wall Street Journal is on
record as saying is better than 401(k)s and IRAs the majority of Americans don t k
now it exists.
Why?
Well here s a clue

I just got off the phone with an insider who works in the 770 industry. This
person has worked first-hand with one of America s biggest financial gurus (a name
you d instantly recognize), as well as several employees from Goldman Sachs and o
ther big investment banks.
And this is what this person said to me: NO ONE in Wall Street has their mone
y in stocks many of them are invested instead in 770' accounts!
Now, consider what this means
Here are the same investment professionals who ve been telling us for years to
uy stocks and meanwhile they re all putting their money somewhere else!

Ridiculous.
Can you imagine the outrage this would create if most people found out about
this?
That s why you ll never hear your broker mention this investment to you, no matte
r how much money he (or she) has parked into it.
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We get a lot more in Dyson s ad about the safety of these plans, and about how the
big banks have tons of their own capital tied up in these plans (that s true, by
the way banks have massive life insurance assets called bank owned life insurance
or BOLI, they take it out on their top employees and it s a large portion of their
core capital), and Dyson s reiteration that he has been putting increasing amount
s of his own family s money (20% of his net worth) into these accounts and getting
a safe 5.5% yield and it s money that he can take out whenever he wants to by bor
rowing against it without penalties.
So what he s talking about is not just life insurance, but probably a specific cla
ss of permanent life insurance that s called whole life.
And it s not really life insurance, not in the way those of us with term life insu
rance policies think of it (making sure your family s not destitute if you die whe
n your kids are young, or your mortgage has 20 years to go), it s more of a wealth
protection and tax-avoidance savings policy.
Whole life insurance is an agreement between you and an insurance company that t
hey will pay out a certain amount of money when you die, and the agreement never
expires as long as you keep paying the premium. That obviously means the premiu
m is far larger than with a term life insurance policy, since a term policy expi
res at some point
term life insurance almost never pays out, so it s cheap. You ca
n pay $25 a month for $500,000 of 20-year term life insurance if you re 35 years o
ld, which is obviously cheap, but that s because you re young and healthy and the in
surance expires when you re 55, well before you reach the highest mortality risk y
ears.
Whole life insurance does have that insurance portion, in that if you die in the
early years of the policy there s a death benefit that probably exceeds the money
you ve put in. But it s not really for that it s set up to accumulate your death bene
fit over time. So if you want a $500,000 policy and the actuaries think you ll die
in 35 years, your premiums plus whatever returns the insurance company can earn
on those premiums will have to add up to $500,000 in that length of time, plus
whatever the insurance company wants to make as a profit. Life insurance compani
es do not generally do crazy investing or earn great returns in times of low int
erest rates, and they know pretty precisely when their insured people will die (

for a large group, on average) so your premiums would likely be pretty stiff.
But that s if you re thinking about it as insurance
much of your premium goes into b
uilding a cash value for the insurance policy, and if you buy your policy throug
h a mutual insurance company (like State Farm, or many others) that s owned by the
policyholders, and you get a participating or dividend-paying policy (meaning you
get a dividend from the insurance company when they make money), then your cash
balance can compound nicely and provide what are effectively decent investment
returns that are indeed tax-advantaged. I don t know whether the 5.5% gain that Dy
son is expecting is typical or not.
Life insurance is often used by families who have some wealth to pass some of th
at wealth down to the next generation without taxes, and it doesn t have accumulat
ion limits that I m aware of, like tax-advantaged retirement plans that restrict t
he amount you can put in every year
for most people contribution limits are a th
eoretical concept, but for the upper middle class and the wealthy the cap of 2550 thousand a year across various retirement accounts is a bother.
So the key aspects of this, from what I can tell, are that you would want to buy
whole life insurance, that you would want to have a participating or dividend-p
aying policy, and maybe even, if Dyson is following the same track as folks like
the Bank on Yourself people, that you want to maximize the amount of savings you
put into the plan (these are often called paid up additions ) to increase your pote
ntial dividends from the mutual company and the growth of the account over time.
The maximizing and be your own bank stuff is all about putting so much of your ne
t worth into these policies that you do all of your big purchases (like buying c
ars, etc.) by borrowing from your policy. But of course, to do that you have to
be the kind of person who can put a substantial amount of money aside for these
large premiums as your forced savings plan.
And the reason it s confusing, even if you don t call it a 770 Plan , is that these are
complex contracts, they re not standardized across different insurance companies,
and from what I can tell you can only really buy them through an agent, whose c
ommission structure may drive him in a different direction than you want to go.
There are many, many variations and riders on these policies that I have only se
en briefly mentioned, and I don t know how most of them work
I suspect that they re
difficult to compare across providers, which is a hallmark of most commission-dr
iven, hidden fee businesses.
Life insurance has a reputation for being riddled with fees, and for permanent l
ife insurance and whole life insurance like this, the articles I ve read suggest t
hat most of the policies start to make sense after 10-15 years, but they suck up
substantial costs and fees that mean you might lose out if you needed to try to
pull your money out before that. This is a small segment of the insurance busin
ess that s focused mostly on the wealthy, and the stuff that Dyson seems to be tal
king about is probably better handled with agents who are specialists in this
pr
eferably those who don t also happen to market a skeezy secret plan.
That is an extremely non-expert view. I don t have a policy like this and I have n
ot researched them fully, I m sure there are people with whole life plans and prob
ably agents who sell these plans out there in the great Gumshoe readership who c
ould probably explain it better (feel free to use our friendly little comment bo
x below) all I can tell you is that Dyson seems to be teasing participating/divi
dend-paying whole life plans as his 770 plans (and no, I don t know what the 770 ref
ers to), and they are real, and I don t know whether they re a good idea for you or
not.
P.S. As of November 2013 this is now also being teased as The Underground Wealth Ac
count: How to Fund Your Own Worry-Free, 100% Tax-Free Retirement
these accounts wer
e pitched in a different Palm Beach Letter teaser ad that was mostly about silve

r, I covered that one here on November 7.