PAM Q&A With Kellan Finley: How To Build Relationships Through The Generations With Insurance

Published in the June Issue of PAM Magazine




Why aren’t advisors making more progress with Intergenerational Wealth Planning?

The discussions and solutions that advisors are providing often fail to resonate with their clients. There’s a disconnect.  Building a relationship with a spouse or child can be a challenge when the only real benefit is keeping the assets at that firm. Family planning sessions are great in theory, but in practice they can be difficult to arrange if there is not a significant reason to do so. Lastly, meeting with children to prepare them for their inheritance can be uncomfortable for everyone; parents may not want to discuss their total wealth with their children, children may feel irresponsible or untrustworthy and advisors must find a way to cater to both sides.

What role does insurance play in connecting to the next generation?

In simple terms, it’s relevant.  In most scenarios, the children and spouse will be the beneficiaries of life insurance policies, either outright or through a trust. When an advisor meets to explain how the assets will distribute in different scenarios, it has real meaning to those beneficiaries. Further, it positions the advisor as a trusted, knowledgeable resource. This conversation is natural and palatable to the client; it is not just a discussion of the client’s net worth and assets.

Long Term Care insurance is another great opportunity for a conversation as spouses and children generally end up as the coordinators of care. Quite often, families don’t have conversations about long term care needs; by initiating this dialogue, advisors bring great value to clients and their families while starting to build a relationship with children and spouses.

So, what are some the specific things that advisors should proactively be doing with clients?

Conducting an Insurance Review is a great place to start. It doesn’t require any internal firm changes or major initiatives; in fact, it may be something that you are already doing. Many advisors bring up insurance early in the relationship with their clients, but too often, that is where the conversation ends. Rather than just checking the box, offer to review the coverage with them and their beneficiaries to insure that the structure is appropriate and all parties are familiar with the plan.

Advisors can also use insurance as a way to add these children as clients now. Unfortunately, younger adults who have not started earning sufficient income are not likely to view their parents’ advisor as their advisor. However, these young adults likely need life and disability insurance, especially if they have young families and are working. By implementing insurance plans for them today, they become a client that can be nurtured until they have their own assets, and eventually inherit their parent’s wealth.

What do you see as the major insurance trends to keep an eye on?

With life insurance, we are seeing many new products come to market with enhanced features and pricing that are making this a competitive space. For clients with existing policies, it may be dually beneficial to review their coverage as a way to gain introductions to their children as well as stress test their policies against the new products. For some clients, you may be able to uncover great savings opportunities.

In the tumultuous long term care market, the carriers that remain have weathered the storm of premium increases and product discontinuations. They have introduced new products that are more appropriately priced. This means that while new policies will have higher premiums upfront, the market is unlikely to see a repeat of post-sale increases in premiums from year to year.

Our projections are based on current market trends. The most prudent course of action is always to make insurance recommendations based on existing, and not expected, circumstances.