Key Assertions and Principles

  1. Life Insurance - is a vital component of comprehensive financial planning. The legal risks are enormous for those who design financial plans without considering the advantages and benefits of life insurance.
  2. Competency and Knowledge - The financial planner is ethically obligated to acquire a professional level of life insurance competency. For example, it is important to understand policy styles, how to select the most suitable policy style, how to integrate the policy into the financial plan, and how to design premiums to achieve optimal strategic benefits. Many fee-advisors admit their lack of knowledge in life insurance design and plan integration. Many fail to seek out advanced planning strategies.
  3. Fiduciary - The financial planner is actually obligated as a fiduciary to operate in an environment of full disclosure. A fiduciary duty is a legal or ethical relationship of confidence or trust between two or more parties. A fiduciary duty is the highest standard of care at either equity or law. A fiduciary is expected to be extremely loyal to the person owed the duty; personal interests must not come before the duty, and a fiduciary must not profit from their position, unless the client so consents - after full disclosure. In applying the principle of fiduciary duty to financial planning, the advisor and client must function in a trusted relationship. To do so, full disclosure is imperative.
  4. Policy Illustrations - can be fraught with misleading information. In fact, they frequently mask full disclosure to clients. Hidden costs, improbable assumptions, and undisclosed risks are prevalent. While a client may not readily understand such highly technical issues as policy cost efficiencies, capital liquidity, flexibility, and control, a fiduciary advisor openly analyzes these technicalities and helps the client understand potential policy results. When this happens, fully disclosed optimal policy design can be achieved.
  5. Assets Under Management - influenced advisors away from comprehensive financial planning toward the objective of asset accumulation. In the wake of AUM fervor, clients were nearly left void of independent, comprehensive, unbiased advisor services. The term “biased” in financial planning refers to a variety of conditions under which a planner or advisor can be unduly influenced in their decision-making. We are not against commissions, but believe that the comprehensive financial planner must actively control any bias introduced by compensation methods. Bias has been known to lead even well intentioned planners astray - the unfortunate result - a client can be left in the dark regarding significant disclosures pertinent to their life decision. The term “unbiased” refers to eliminating questionable influences and providing full disclosure of policy costs and risks.
  6. Old and New Paradigms - The financial planner must understand that there are significant differences in how life insurance worked in the days of old compared to today. The assumption of risks and responsibilities between the agent and insurance company has drastically shifted. For example, an insurance agent who sold a whole life policy many years ago assumed the responsibility of selling and delivering the policy. After the policy was sold, the insurance company assumed the risk and responsibility for performance of the contract. However, as progressive policy styles such as Universal Life, Variable Universal Life, and others have emerged, a greater amount of risk and responsibility has shifted from the insurance company to that of the client, agent and/or advisor. Fiduciary responsibility has shifted to the agent/advisor. Today’s fee-advisor must be aware that they are responsible for much more than mere insurance policy placement. They have a personal responsibility for fiduciary compliance, policy style selection and design, active monitoring, and ongoing client relationship. A financial planner should educate a client on the advantages of a policy style and be able to substantiate why a particular policy style is the best choice for the client.
  7. Commission Versus Fee Conflicts - Fee-advisors may find it difficult to accurately evaluate the wide variety of methodologies and costing tactics used by commission planners. These unknowns can place the fee-advisor at a disadvantage when providing meaningful policy value comparisons to their clients. Additionally, the fee-advisor may find it difficult to transcend conflict of interest issues when providing client services in tandem with the licensed commission planner.
  8. We work with elite advisors, consultants and firms committed to a high standard of fiduciary and ethical obligation in life insurance and risk management planning who represent a variety of professional designations, including: CFP, CLU, ChFC, LIC, JD, CFA, CFS, CPA, ChFP, FLMI, RFC, and LLIF.
  9. We have designed our Retainer Agreements to accommodate a broad range of professionals; from the individual advisor to the larger advisory firm. Give us a call today at (586) 745-7037