Protection Products

Why You Must Resolve to Manage Risk in 2018


It's been a great run in the equity markets. If you manage money, business has been good. Your assets under management are likely at an all-time high. You’re starting the year with a nice recurring revenue stream. Life is good – or is it? 


Well, life insurance isn’t all good. It’s somewhat of a pun, but in all seriousness, risk management products have taken a back seat to AUM. Who wants to talk about death, getting sick or running out of income in this market? Not many people. 


Let’s face it, most of your time is spent on asset allocation, rebalancing, tax management, seeking alpha, low-cost, etc., etc., etc. By the time you’re done with all that, the risk management strategy can wait for the next meeting. You can get to it another time … your clients are fine, right?! 


For now. Unless you know something I don't, everyone has a 100 percent chance of not being fine forever.  


When, not if!

What if you put the risk management conversation at the forefront of your conversations this year? Actually have a heart-to-heart discussion about the risks in life. I’m not talking about death insurance conversations, I’m talking about living insurance conversations.


You need to plan for WHEN something will happen, not if. You need to talk about risk – extended health care, chronic illness, disability, outliving income and, yes, death – at every client meeting. 


To put it bluntly: You cannot call yourself a financial advisor, wealth manager or any other term that implies “holistic” planner unless you have a strategy around risk management. 


Resolve to Manage Risk

No more excuses. Make 2018 the year you become a "When it happens" advisor. To clarify, I don't think your clients must buy or own insurance coverage. But I do think you need to help them set a plan for action for WHEN one of life’s risks happens to them.  


Take the pressure off yourself and just have a conversation with the clients you serve. This isn't about product, or features or price. Tell them that you simply care enough to make a plan. When you do this, I bet your business will grow, your clients will be happier and you will know more about them than you do now. 


And yes, I imagine a few folks will want to transfer some of that risk away from their own balance sheet. If they want to know what that looks like, that's when you call us. And we’ll answer. 

Risk Management Life Insurnace Long Term Care Linked Benefit Retirement Disability Income Financial Planning Wealth Management

Running Toward Tax-Deferred Money: Turning a Challenge into an Opportunity


What is it that we get spooked so easily by challenges? Something changes, or becomes a little difficult, and we prefer to complain, or just avoid the problem completely. 


Well, I believe inside every challenge lies an opportunity. Recently, I talked with Mike McGlothlin (Ash’s EVP of retirement and one of the most respected guys in the annuity business) about why so many advisors are running away from a certain challenge rather than running toward it. 


The challenge we discussed? Tax-deferred assets. I’m blow away by the number of advisors who have NO IDEA they can turn tax-deferred gains into tax-free benefits. Yes, you read that correctly. Tax-deferred into TAX-FREE. I’ll give you a couple examples of what I’m talking about. 


Linked Benefits

You can take an existing, nonqualified annuity and do what’s called a 1035 exchange, moving those funds into a linked-benefit product for long-term care. Your clients’ asset is leveraged into a larger pool of benefits, which are tax-free. We call this “transferring the risk” because you’re shifting the risk of long-term care expenses to an insurance company, rather than leaving that risk on your clients’ retirement assets (and subsequently taking a hit with taxes on their pent-up gain). 


Harvesting the Cost Basis

Non-qualified annuities are great accumulation vehicles for many reasons – multiple investment options, tax deferral and guaranteed income for life. However, a highly appreciated annuity is one of the worst assets to have on your personal balance sheet at death. Controlling the tax – the amount and the timing – is a critical factor to a successful legacy strategy. You need to have the conversation with all your clients about controlling tax at distribution, regardless if that comes during their lifetime or at death. 


Don’t Miss the Boat

By using these strategies, you’re accomplishing multiple things at once: 

  • You’re creating tax efficiency as their tax-deferred gain becomes a tax-free benefit
  • You’re creating a more meaningful/impactful result for your clients
  • You’re involving the next generation in the planning process, establishing trust and credibility and increasing your chances of keeping that AUM past the first generation 


If you’re avoiding your clients’ tax-deferred assets because you’re afraid of the taxes on their pent-up gains, then you’re missing the boat. Better yet, you should just get your own boat because this might be the next “blue ocean.”


Mike and I dove deeper into this topic during a webinar Sept. 21. If you client has ANY tax-deferred asset, you need to watch this replay.



For more, watch this 20-minute video with Tim and Mike McGlothlin explaining the topic in further detail.

Turning Tax-Deferred Into Tax-Free

Life Insurance Annuities Tax-Deferred Linked Benefit