The Case for Fee-Based RIAs to Add Insurance Specialty

One change I have seen in the recruiting requests of my RIA clients is to find them a Life Insurance Specialist. Afterall, the ability to grow organically often lies within something you are overlooking.

Up to this point, most RIAs chose to refer out lfie insurance business to someone outside of their company. Why? It could be: compliance reasons, fee-based reasons, or just simply be that to do so would be to freely invite change. Change is scary.

Let me make a case for pursuing changing your product expertise. Overall, the inclusion of life insurance planning in wealth management services reflects a broader trend towards more integrated and client-focused financial solutions.

Adding life insurance expertise can also significantly increase the revenue of wealth management firms in several ways:

1.???? Commission Income: When wealth management firms incorporate life insurance into their offerings, they can earn commissions on the sale of policies. This can be a substantial source of revenue, especially if the firm specializes in high-value life insurance products.

Granted, you may have to do this outside of your RIA. You can do this by dually registering or partnering with an FMO/IMO.

2.???? Fee-Based Services: Firms can charge fees for comprehensive planning services that include life insurance analysis, policy recommendations, and ongoing management. This enhances their service model and allows for predictable, recurring income from clients who require continued support.

3.???? Cross-Selling Opportunities: Insurance needs are often interconnected with investment strategies and overall financial planning. By having life insurance expertise, advisors can identify opportunities to cross-sell products to existing clients, potentially increasing the average revenue per client.

4.???? Attracting New Clients: A broader range of services, including life insurance, can attract new clients seeking comprehensive financial solutions. Wealth management firms that advertise their capacity to provide both investment management and life insurance planning may appeal to a wider audience.

5.???? Client Retention and Loyalty: Providing a more integrated approach to financial planning that includes life insurance can enhance client satisfaction and loyalty. Clients are less likely to switch firms if they perceive their wealth manager as a one-stop solution for all their financial needs.

One not need to look very far to see examples of surviving clients investing the life insurance payoff with another Advisor, or God forbid, the Insurance Agent that hands the beneficiary the check! : )

6.???? Estate Planning Services: Many clients value life insurance for its role in estate planning, particularly for wealth transfer and tax implications. Firms that can help clients navigate these complex issues can command higher fees for their expertise, thus increasing overall revenue.

By expanding their capabilities to include life insurance expertise, wealth management firms can diversify their income sources, enhance client relationships, and improve their competitive positioning in the market.

If you are looking to drive organic growth, why not add a capability within your firm that allows you to better provide holistic financial planning to your clients? Global Recruiters of Mid-Cities (GRN) can help you in this endeavor as we have recently with several of our clients.