The Missing Piece to Your Wealth Practice
I am lucky enough to have been at this job for a long time and, like they say, if you’ve been doing something long enough, you are bound to see everything.
Earlier this year, I received a call from one of my traditional asset-under-management Wealth Managers.?His AUM is approximately $100MM, he serves the High-Net-Worth space, and his experience in life insurance sales was largely term insurance for friends and family and the occasional buy/sell case for his business-owner clients.?From the beginning of our conversation, I could sense his excitement.?One of his larger clients, a husband and wife, had come in for their quarterly review.?As they were wrapping up, the client mentioned he had recently met with his CPA and Estate Attorney.?Both had recommended that he and his wife look to purchase life insurance to be placed in his newly established Irrevocable Life Insurance Trust.?The clients preferred to pay the premiums over the next 20 years, and they had a budget of approximately $250,000 a year.?He and his wife would like to be examined the following week. They’d be relying on the advisor to choose the carrier and product, but insisted the carrier be “A” rated and “somebody that I’d heard of before”.?Just like that, the advisor had a potential sale fall right into his lap.?The sale would help his clients, help their beneficiaries pay estate taxes, and generate a sizeable commission for the advisor.?
If you are new to the life insurance business let me stop here and point out two things.?First, this almost never happens.?The advisor had done a poor job of managing this clients’ assets.?Sure, he could tell you to the percentage point where the assets were allocated, but he’d never once inquired about the client’s estate plan, how much he intended to leave to his beneficiaries, or even who his CPA and Estate Attorney were.?He was lucky.?Having never inquired about the client’s life insurance situation and never having met this client’s other centers of influence, it’s amazing this sale hadn’t landed with another agent.?Second, and most importantly, the advisor got this sale because he managed the entirety of this clients’ assets and was trusted.?As the trusted advisor to a high-net-worth investor, he had put himself in the best position to handle this important transaction for his client.?
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I remember the first time I heard the term “Wealth Manager”.?It was sometime in the mid to late 90’s while I was working at Smith Barney.?We had just been bought by Citigroup and that meant changes were coming.?We were no longer just Financial Advisors, we were now Wealth Managers(!). Truth be told, other than the new title on my business card, I really didn’t know what that meant.?I was about to find out.?Our job would now be to not only manage our client’s investment portfolios but also sell them Financial Management accounts (think checking at a brokerage firm), mortgages for their homes, lines of credit for their businesses and the list goes on (I seem to remember travel insurance but I could be mistaken). The concept was simple. The more products we sold our clients, the more control we had over these important relationships.?More specifically, how can I, as your trusted advisor, make investment recommendations without knowing about all the pieces that comprise your total financial picture??It made perfect sense.?Cross-selling as far as the eye could see. What a tremendous opportunity.?From the client’s perspective, you could now rest assured that all recommendations made by your Wealth Manager were made while considering your financial situation in its entirety.?Like many things that banks and wirehouses do, they started on the right path and the concept was (is) a legitimate and important one.?The concept, a concept that a large portion of our industry now uses as their business model, is sound. The implementation of the concept by many advisors today, however, is at best incomplete.?Meet with most Wealth Advisors, Family Offices, or RIA’s today and I have very little doubt that all can walk you through their investment philosophy, models, procedures, and planning modules in great detail.?However, when you move from the investment landscape to life insurance, many of the aforementioned advisors come up short.?Most will come up very short.
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So what does all of this have to do with my advisor and his big case? It’s actually quite simple.?As a trusted Wealth Manager, you provide planning and investment selection that is comprehensive in scope.?These “big picture” services are part of the reason why (probably a big part) your clients have trusted you to be their advisor for all things concerning their wealth.?With this in mind, why do so many Wealth Managers choose to send their client’s life insurance business to outside sources? These outside sources, whether you care to acknowledge it or not, are now a threat to your wealth management business (please see the link below to an interview where I discuss this in detail). It is your obligation to provide the same detailed and thorough services to life insurance that you provide on the investment side.?
Admittedly, this can be daunting if you have little experience in life insurance sales.?If this is you, and life sales is something you’d like to consider making part of your practice, let me offer some direction on how to get started.?The first person I’d recommend reaching out to would be peers within the Wealth industry.?There are a large number of Wealth Management shops, RIA’s and Family Offices that have successfully incorporated life insurance into their everyday practice.?Talk to some of them.?If you are part of a broker-dealer, talk to your OSJ or another office within your BD that has experience in life sales.??Second, reach out to me.?I’d be more than happy to offer you some advice on best practices to get started.?This comes with zero expectations of ever doing business with you.?I know a lot of folks in the industry and have actually referred advisors to other companies when that advisor might be a better fit.?All of that said, if we’re a good fit, I’d love to work with you.?Lastly, take some time to read the article below.?The author lays out steps you may want to consider before getting into life sales.?
The bottom line is this;?as a Wealth Manager, RIA or Family Office, you control your top client’s assets.?Your plan will play a large role in your client’s financial success.?You are the trusted advisor.?This role comes with a great deal of responsibility.?Your client’s life insurance is part of that responsibility, and by making life sales part of your practice, you truly become the comprehensive Wealth Manager that so many in our industry claim to be.?