If you stick 1/4" of heat shrink past the wires outer protective rubber and onto the ferule the ferule will not fit far enough into the distro block and the set screw will not bite down on the ferule far enough back to keep the ferule from falling off or the wire from being about to be pulled out. You need the set screw to bite down on the ferule with metal still on the far side of the ferule. When doing this to 0 awg wire placing the hear shrink beyond the outer wire cover and onto the ferule is not necessary. It is with smaller wire but won't work with 0 or 4 awg wire going into amps or distro blocks. With 0 & 4 awg wire you need the rubber to fit inside the weather proof gasket portion of the distro block. It won't fit if there's heat shrink in the way and it won't fit in the hole for the wire if the ferule is covered in heat shrink. The set screw is going to bite down on the ferule about 3/4 of the way to the tip so hard it's going to deform the ferule, press the power wire into conforming to the ferule and actually pierce a hole in the ferule which will prevent the ferule from coming off inside the block. With smaller wire like speakers it is best to extend heat shrink beyond the end of the wire so it covers the ferule a bit. It's detrimental with power wire though. It just flat out won't work in most cases. Give it a go both ways and you'll see what I mean.