Business Insurance In Wonderland: A Tale Of Two Worlds

In one respect the Biden presidency has succeeded in unifying Americans. We will each bear the costs. Volatile prices, increased regulation, and uncertainty have costs. Especially here in Florida, businesses are watching.

Not to worry. A colleague of mine has a wise saying. “There are no victims. Only volunteers.” It’s a powerful mantra.?

We need to apply a victorious mindset. Our partners, your clients, and your business are depending on you for that. Here are the take-aways you can share with them.

CFOs, RIAs, and founders I work with acknowledge their fiduciary responsibility. They need to discuss the following subjects as part of that role. We refer to them as “current events.”

Today’s Top 3 Successful Client Concerns

The importance of the Game Stop story. It gives clients pause. Wall Street was “short” shares of Game Stop and got hurt. Wall Street’s response to the surprise digital rally was to retaliate. It called for new trading regulations. The client will ask: Do we need a defense against double-standards?

The turmoil in the two-party political system. The three branches of the federal government are under siege.?Their foes attack and two-way communication is thin. Ignorance of this issue is not a viable solution.?

And third,?the departure from normal conversational language. Behavior that challenges norms, also hinders business policies and procedures. These are social unknowns. They make CFOs, founders, and RIA clients ripe for assault, and lawsuits.

Let’s now consider basic investing. No exotics. Only historic Wall Street essentials.?

Equities and equity markets present opportunities, but there are fees and taxes. . (Another observation all mine. They are subject to legal but questionable manipulation. Investors should not dismiss this.)?

Mutual funds are secure, but they are slow growth. Furthermore, there is no guarantee they will perform. The illustrated profit is returns on equities.

Hello… Is There Anybody Out There??

Is there any way to invest and offset the impact of current events? Is there a way to empower retirement??

Yes. But the rules and strategies have changed. More and more professionals are discovering structured insurance. Not for a whole portfolio. But to diversify risk.?

The industry has been developing power tools for business over the last twenty years. Because you are reading this, you can now access those powers for your business. And you should.

Buy-sell contracts now, for example, can contain business acquisition financing. Elsewhere, business overhead insurance gives a business continuity. Knee surgery for the boss with complications does not threaten the business now. Such disability protection keeps the shop running during his recovery! It does more. Employees are likelier to remain on a ship with lifeboats.?

Few in business become excited about these decisions. Death and surrender talk freaks us out. But, consider this. My garage at home story provides us a useful point-of-view.

Every day for six years I’ve walked through my garage. I really need to clean this out, I think. Every day I think this—I should really clean this garage. Weekends come and go. More stuff comes into the garage. Nothing ever leaves. Subliminally—I hear—I really need to clean the garage. I hear this every time I see the garage door.?

One day I just do it. It takes me about 2 sweaty hours to clean the garage.?

The Salvation Army accepts the better stuff—beds, cookware, furniture. The moldy kids toys get tossed. I sweep and mop. I discover a baseball glove I’d been thinking about. There is a box of family photographs—old ones. When I discern the color of the floor (reddish brown) from and the walls (faded yellow) a huge weight lifted from me. That moment makes me light. It hits me. This dang garage has interrupted my subconscious thought EVERY DAY for six years. Every day. Instead, now I have peace.

The Financial Garage?

Let me tell you something. A clean garage is like designing your business succession plan. We know we can and should do the thing. But, we dither. Make excuses. This has to stop now because we are in a time of fast change. Time is up.

There is so much good news for you though. Learning about adaptable (not fixed and rigid) financial tools brings distinct advantages. For the RIA client, for the founder, for the CFO you reclaim your power to design. This is not reacting. This is doing something for the good of the company. It is a new offense.

By addressing risk with a brand new map a better plan emerges. Every year ahead seems healthier, lighter, and more calm. This is the role of a victor.

Current events may be the catalyst for something else. The lockdowns and the separation from family and friends eased professionals to change. The siloing between professional fiduciaries appeared stupid. Many fiduciaries eyes are now open. The opportunities to do better things for clients is clearer. This includes working together across disciplines. And the pro makes more money!

Hey BUDDY! WIIFM??

Here are a few ways we are sharing revenue. Our professional partners are adapting to collaborative client services. It’s different. It is better.

RIAs?use our tax savings as if they are brand new assets. Tax-deferred or tax free income the client is real diversification. It gets better. Assets are also shielded in cash buildup plus growth plus insured benefits. Now, the RIA is actualizing investment wisdom. The client has money growing “under the mattress.” As I said earlier, these plans are unique and flexible. And the client can?access cash without liquidating anything. And without triggering a taxable act.?

CFOs?are often seeking advantages for their business(es). Productivity and value, hiring, and retention are the “deliverables” of a CFO’s analysis. Meanwhile, partners and key employees want more for less. Ugh, the life of the poor CFO. Here is something we have seen work. Reallocate employee tax payments, at no added cost to the employer or the employee. Elsewhere programs pull capital to the for the CFO's value creation. Business’ taxes can be offset better. Some get deferred for better use in the future. Another bonus in real life? Employees praise the company. This is the best PR any business can get.??

Founders?sometimes like bundled plan designs. Tax-free future income, can add ample provisions for family health coverage. Financial stability comes from such a thorough business-based plan. Some businesses like this as deferred comp. Some plans are supplemental (to top level or all employees) at very low cost to the business. A Buy/Sell plan sends several positive signals. It equalizes the business partners. It keeps the business’ operating order moving. Employee commitment tends to follow such enterprises. Steps like these may appear to favor the founder and add to separation from employees. Continuous operation is good for every stakeholder.?

We have all seen things we cannot un-see.

And Finally… The Truth

If current events don’t challenge our worldview something else will, someday. Fiduciary demands doing what is right. And I know this. When a CFO, an RIA and that client, when a founder takes decisive action—we share the feeling of victory.?

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Robert Bailey is the Managing Partner of TrustedAdvisory/Parallax, specializing in business tax defense, and the host of “What’s the Point” a podcast about Palm Beach’s business personality.?Get more information and connect about how to integrate plans like these into your business, your practice and your portfolio of tax wise assets at www.trustedadvisory.com.