Most of the advisors we work with manage family wealth. You’re seeing more and more people migrate to this assets under management (AUM) practice – and, why not?! It’s a great business model, and you’re helping people build and manage their personal wealth.
But I have a question. Are you walking by AUM that is right under your nose? I might be bold in saying this, but you likely are!
The reason is simple. Most practices are managing wealth for individuals and families – many of these folks are business owners. I’ll give you a hint: Are you managing their corporate assets as well? Or, are you letting those assets walk right out of your office?
Literally BILLIONS of dollars are sitting in the coffers of businesses, earning next to nothing. Law offices, construction firms, farms/ranches, plumbing and heating firms – it doesn’t matter the type of company. Let’s be real. Most businesses have a lot of cash sitting on the sidelines, whether it’s in reserves, being held for bonding requirements, or just sitting in a rainy day, feel-good fund.
Unfortunately, they are earning 0.0 percent on that cash if it’s in a bank … OK, maybe 10 basis points at the most.
Aside from holding your clients’ business cash for next to nothing, banks are doing something else that’s worth paying attention to … They’re holding assets in Bank-Owned Life Insurance (BOLI). BOLI is simply an institutionally priced life insurance policy for banks’ Tier 1 capital.
Why do they use it? I’ll give you two reasons:
Are banks smarter than other organizations of that size? Why don’t other businesses use these types of products? Because they do exist!
At Ash Brokerage, we have three different highly rated companies that offer BOLI-type products for businesses – from “mom and pop” companies up to large corporations. They can take $100,000 deposits, or we’ve participated in placements that have approached eight figures.
All you have to ask your business owner clients is one thing:
“Do you routinely have significant cash balances sitting in your company? If you do, I’d like to show ways to put that money to work and use the same instruments that more than 82 percent of the largest banks in the country use.” (Oh, and the yields can be 2.5-3 percent NET of all costs … That’s a lot better than 10 basis points!)
Trust me, you will get a lot of interest if you ask! And when you do, please contact me or one of my team members on the Ash Brokerage Advanced Markets team – we will customize a design for you and your business owner clients.
Take a closer look at this solution and see the numbers for yourself – join us for a webinar on this topic at 10 a.m. August 28.
*2017 Equias Alliance/Michael White BOLI Holdings Report: http://www.equiasalliance.com/2017-equias-alliance-michael-white-boli-holdings-report
Friday the 13th is a few days away, but now is not the time to panic. On this day that’s so often associated with bad luck and superstition, it would be easy to focus on sad stories where the lack of insurance protection exposed consumers and their families to overwhelming risk.
Instead, let’s talk about how diligent advisors can collaborate with insurance specialists at Ash Brokerage to help clients protect their hard-earned assets. Insurance should be sold on need, not scare tactics, so let's take a look at some typical consumer insurance needs.
As executive vice president of life sales distribution, Bob Klein is responsible for all of Ash Brokerage’s life, long-term care and disability income insurance sales. He is driven by his desire to help others get the most out of their natural gifts, and he gets the most satisfaction from seeing others grow and succeed.
Do you have clients who are business owners? Then you should be asking them some key questions:
Nearly every business has key employees who are vital to its success – without them, the negative effects could be catastrophic. That’s why we’re having more conversations than ever about key person disability insurance. This type of coverage is critical to the planning process for business owner clients.
You may already be familiar with key person life insurance – that’s a great product, too. The key difference is the qualifying event. With life insurance, it’s the death of the key person, but with disability coverage, it’s a disabling injury or illness.
Either event could be devastating to the business, but there’s a much higher probability of being disabled during your working years versus dying. So, if your clients want to insure a key employee with life insurance, they should absolutely insure them with disability insurance as well.
As vice president of disability income and long-term care insurance at Ash Brokerage, Tim Kukieza knows coverage he helps place will dramatically and positively impacts clients’ lives when they need it most. His vast knowledge comes from more than 20 years of experience in the insurance industry, including working with a number a carriers before joining Ash Brokerage.
While sole-owned businesses continue to dominate, multi-owner businesses continue to increase by record numbers year after year. Business continuation is a vital part of any business succession plan, but with multiple owners and estates involved, it can be disastrous without proper planning. The surviving owners and the heirs of a deceased business owner have wants and needs that can be fulfilled by a well written business continuation plan.
When a business owner dies, the surviving owner(s) may want total control of the business without interference from the deceased owner’s heirs. They may want a prompt transfer of the deceased owner’s interest at a fair price. They may also want the loyalty and support of employees, customers and creditors during and after the transition in ownership.
The heirs may want ongoing financial security after the loss of the deceased owner’s salary and benefits. They may want a prompt settlement of the deceased owner’s estate, including proper tax-valuation of the business interest, if it is to be sold. They may also want retention of the business by family members or a prompt sale of the interest at an attractive price.
Without a written buy-sell agreement that spells out in detail what will happen when an owner dies, UNWANTED consequences may result. These include conflicts – and possibly litigation – between the deceased owner’s heirs and the surviving owners, delays in the transition to successor ownership and delays in settling the deceased owner’s estate. In addition, there could be potential loss of customers, employees, and creditor confidence that can damage the business and force liquidation.
Your clients could avoid these consequences and find many other advantages in creating a formal buy-sell agreement. This could be the first step in assuring an orderly and successful transition in business ownership following an owner’s death. It could assure a fair price for the business interest and terms of sale that are reasonable to all parties. It could help set a value for the business interest for estate tax purposes to help avoid estate settlement delays and IRS challenges. It could also create confidence in the ongoing vitality of the business in the eyes of customers, employees and creditors.
The Bottom Line: Creating a written buy-sell agreement can fulfill the wants and needs of surviving business owners and the heirs of the deceased business owner.
© 2018 Ash Brokerage LLC.