Life Agents AREN'T Part of HNW Advisors

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Aug 20, 2007 12:04 am

The title distills what the branch manager at a wirehouse told me at our my interview this week.

He drew a small graphic with the center being a HNW individual. He then drew three lines out from there which represented the three advisors that EVERY HNW person has. One line was to an attorney/law firm, one was to a CPA/firm, and one was to a wirehouse (he would have included INDY's) FA. He stated that life insurance companies and agents were NOT a part of that HNW persons life as an on-going support team.

He further stated that the large mutual life co.'s have built their business on telling incoming agents that they (the mut. life co's) WERE a part of the HNW persons advisor team but he stated emphatically on cross examination by me that life agents were NOT. 

Please be specific in your responses with your personal experience.

Thanks.

Aug 20, 2007 12:45 am

So how does a HNW individual avoid those nasty estate taxes?

Aug 20, 2007 1:38 am

Well, that was one of the examples he used to prove his points.


He made the claim that agents aren't involved in serious estate planning. That is done by the three: lawyers, cpa's, & fa's. He laid out a recent scenario where one of his HNW clients contacted him b/c the lawyer he had hired to work up a generation transfer plan had developed something so complicated that he couldn't understand it. He (the local branch mgr.) gathered a great deal of information on the man's situation and then flew himself and the HNW client to the home office for a day of meetings... all which had the committment of exactly $0 from his client. He stated that the client ended up taking the advise of the home office attorneys and did business with the firm. It involved taking a $1M loss to roll everything over to a Roth... The HNW engineered his income to make that possible. The branch manager stated that the HNW client was very happy.


I replied back that a knowledgable and experienced agent would have solved the problem by buying a second to die policy that would probably have cost far less than $1M in premium.... Now I was serious when I came back with that but his reply was: "Yeah, if you go with a life insurance company all roads will eventually lead back to one thing: BUY MORE LIFE INSURANCE."


Aug 20, 2007 1:50 am

To elaborate:  Last month our office wrote a $70-mil policy to cover a guys estate taxes.  The yearly premium is around $350,000/yr.  In addition he is moving his assets to us from a wirehouse, does that make us "trusted advisors"?  I admit this doesnt happen every day but it does happen.


I joined an insurance company because it allows me to do both.  I can do things that a wirehouse cannot/will not, but there is nothing a wirehouse can do that I can't.


I have a series of questions that I ask someone who tells me "I have an advisor" that instantly makes them wonder if their advisor has their best interests in mind and usually gets me an appointment. 


Most wirehouse advisors could care less about wills and trusts because they are only concerned with AUM.  I come in, help them set up a will/trust, fund it with a nice paying LI policy, AND get all of their assets.  The funny thing is the LI usually pays me as much as getting the assets. Taking AUM from a wirehouse is easy, my only competition is other LI companies.


LI companies and wirehouses are alike in that BOTH will tell you almost anything to get you to sign up.

Aug 20, 2007 1:57 am
spintofish:

Now I was serious when I came back with that but his reply was: "Yeah, if you go with a life insurance company all roads will eventually lead back to one thing: BUY MORE LIFE INSURANCE."




That really depends on the company/branch, you are doing the right thing by doing a lot of research before you join either one.  Everyone is different but for me a LI company was a better fit for my target market. I have a much broader customer base to work with because I don't have to focus solely on HNW individuals although they are nice when you get them.

Aug 20, 2007 2:09 am
spintofish:

Well, that was one of the examples he used to prove his points.


He made the claim that agents aren't involved in serious estate planning. That is done by the three: lawyers, cpa's, & fa's. He laid out a recent scenario where one of his HNW clients contacted him b/c the lawyer he had hired to work up a generation transfer plan had developed something so complicated that he couldn't understand it.



That's why we always accompany our clients to the meeting with the attorney, I am no expert on trusts but we have been educated enough to know what to look for.  We also suggest an attorney we use because we know if the reccomended course of action is LI for funding the trust the biz won't go to a brother-in-law or friend.

Aug 20, 2007 6:54 am

spintofish,


If you want to work at a wirehouse, do so, but don't work at one with a dishonest BOM.

Aug 20, 2007 8:13 am

Am I the only adult who sees, "Forum for FA's Only" and thinks of the Norman Rockwell painting of the little boys in a tree house with a sign that says, "Girls not allowed."


It is amusing that simply talking about the fact that do it yourself investors outperform "Financial Advisors" year in and year out makes so many of the posers crazy.  It's as if they're all huddled in the corner makng noise so that they can't hear the sounds of reality.


For an indication on how immature Joeboy and Indynow are note that not only did they "join" the clubhouse they actually put the clubhouse motto as their signature line.


Two grown me, parading as "Financial Advisors" who waste so much time on this forum, that stupid forum where everybody is a Sergent or a Captain or a Private and now another complete waste of time.


Curiously pathetic and oddly sad.  They'll say they don't care what I think.  Apparently not, but actually going out of your way to appear childish does not reveal a man who is capable of being mature.

Aug 20, 2007 8:15 am
anonymous:

spintofish,


If you want to work at a wirehouse, do so, but don't work at one with a dishonest BOM.



What should a prospective employee do, ask during the interview, "Er, this will sound odd-----but are you honest?"

Aug 20, 2007 8:31 am

What should a prospective employee do, ask during the interview, "Er, this will sound odd-----but are you honest?"


Putsy, when someone lies to you, do you bother to ask them if they are honest?  Spintofish has a dishonest BOM and if he works there, he should expect to hear lies.  

Aug 20, 2007 8:45 am

I am not an ultra high net worth guy, but I'd qualify as HNW and I am so turned off by life insurance types that I won't even return calls from my own agent any longer.


I have as much coverage as I need and I have no need to talk to him again.  For a number of years once a year he'd call and suggest that I should switch something or other for something or other.  I either have too much whole life, or too little--sometimes my term coverage should be switched to universal and sometimes I need more term coverage as long as I don't have to prove insurability.


Years ago I had a brother who was killed in a car accident.  He had been a life insurance guy and had sold himself a $1 million dollar whole life policty with an accidental death rider.  Our mother was his beneficiary because he was not married when he sold it, did not change it when he married, and was divorced when he died.


Anyway, she got that $2 million and could not get rid of it fast enough--gifting maximum sums to her sons, daughters in law, and grandchildren.


She also bought was she was told was a $250,000 single premium deferred variable annuity for her two sons.  Ten or fifteen years later the sons--one a banker and the other a SVP at a wirehouse--were looking over the paperwork and came to the realization that what had been bought was not a variable annuity but was some sort of life policy.  She became both confused, embarassed and felt victimized so she took the paperwork away and we've never been allowed to see it since.  She explained that a man at the church was a new agent and she asked him what she could buy from him to give him some help while he was getting started.  I suspect there was a sales contest on for whatever it is she bought for $500,000 and someday my brother and I will find out what it is.


Actually I asked my own agent to check on it and he reported back what it was--but I didn't care at that point and don't really remember.  It's variable life, or variable universal life--it will be part of my estate, which is fine.


My next involvement with life types came when my parents were told by their CPA that they should buy second to die insurance--so they did. 


The ONLY ROLE the life guy played in the entire process was to fill out the application.


There is a hiearchy in financial planning.  Appropriate life insurance is the foundation of a sound financial plan--but it's sold by companies who truly end up hiring the least qualfied of those who drift into the brokerage/insurance industry because they can't seem to find a job doing anything else.


That does not mean they beat their wives, or kick their dogs.  They're nice guys and gals--quick to volunteer--great family people--pay their bills on time--provide a valuable service to the greatest  number of people.


But it's a harsh reality that they're also not the sharpest knives in the drawer.

Aug 20, 2007 8:52 am
DAtoo:

I am not an ultra high net worth guy, but I'd qualify as HNW and I am so turned off by life insurance types that I won't even return calls from my own agent any longer.


I have as much coverage as I need and I have no need to talk to him again.  For a number of years once a year he'd call and suggest that I should switch something or other for something or other.  I either have too much whole life, or too little--sometimes my term coverage should be switched to universal and sometimes I need more term coverage as long as I don't have to prove insurability.


Years ago I had a brother who was killed in a car accident.  He had been a life insurance guy and had sold himself a $1 million dollar whole life policty with an accidental death rider.  Our mother was his beneficiary because he was not married when he sold it, did not change it when he married, and was divorced when he died.


Anyway, she got that $2 million and could not get rid of it fast enough--gifting maximum sums to her sons, daughters in law, and grandchildren.


She also bought was she was told was a $250,000 single premium deferred variable annuity for her two sons.  Ten or fifteen years later the sons--one a banker and the other a SVP at a wirehouse--were looking over the paperwork and came to the realization that what had been bought was not a variable annuity but was some sort of life policy.  She became both confused, embarassed and felt victimized so she took the paperwork away and we've never been allowed to see it since.  She explained that a man at the church was a new agent and she asked him what she could buy from him to give him some help while he was getting started.  I suspect there was a sales contest on for whatever it is she bought for $500,000 and someday my brother and I will find out what it is.


Actually I asked my own agent to check on it and he reported back what it was--but I didn't care at that point and don't really remember.  It's variable life, or variable universal life--it will be part of my estate, which is fine.


My next involvement with life types came when my parents were told by their CPA that they should buy second to die insurance--so they did. 


The ONLY ROLE the life guy played in the entire process was to fill out the application.


There is a hiearchy in financial planning.  Appropriate life insurance is the foundation of a sound financial plan--but it's sold by companies who truly end up hiring the least qualfied of those who drift into the brokerage/insurance industry because they can't seem to find a job doing anything else.


That does not mean they beat their wives, or kick their dogs.  They're nice guys and gals--quick to volunteer--great family people--pay their bills on time--provide a valuable service to the greatest  number of people.


But it's a harsh reality that they're also not the sharpest knives in the drawer.



1. Does your wife think you have too much insurance?


2. I'm glad your brother is dead, but I wish it had been HIS brother, instead.


3. Have a nice day.

Aug 20, 2007 9:19 am

But it's a harsh reality that they're also not the sharpest knives in the drawer.


Your brush is a little on the broad side.   There's no question that there are plenty of idiots selling life insurance.  There's also plenty of idiots at wirehouses and practicing law and doing every other profession.  Can virtually anybody become a life insurance agent?  Yes.  Can virtually any life insurance agent work with the HNW?  No way. 


We are talking about life insurance and the HNW.  Those agents are some of the sharpest knives in any drawer.  Anybody can get hired, but the cream rises and there is a lot of cream.  There are also a lot of idiots.

Aug 20, 2007 9:23 am
anonymous:

What should a prospective employee do, ask during the interview, "Er, this will sound odd-----but are you honest?"


Putsy, when someone lies to you, do you bother to ask them if they are honest?  Spintofish has a dishonest BOM and if he works there, he should expect to hear lies.  



Is it a lie to say that an HNV investor uses a CPA, a lawyer, and a broker--excluding a life guy--or is it a point of view?

Aug 20, 2007 9:30 am
anonymous:

But it's a harsh reality that they're also not the sharpest knives in the drawer.


Your brush is a little on the broad side.   There's no question that there are plenty of idiots selling life insurance.  There's also plenty of idiots at wirehouses and practicing law and doing every other profession.  Can virtually anybody become a life insurance agent?  Yes.  Can virtually any life insurance agent work with the HNW?  No way. 


We are talking about life insurance and the HNW.  Those agents are some of the sharpest knives in any drawer.  Anybody can get hired, but the cream rises and there is a lot of cream.  There are also a lot of idiots.



Are you familiar with the book, "The Bell Curve?"  It measures the relative intelligence of ethnic groups and shows overlaps at the extremes.


In that fashion I will agree that there are some smart guys at life insurance general agencies--a few, a precious few.


However if we were to plot their IQs on graph paper, along with the IQs of wirehouse producers the top of the line life guy would come in as above average at a premier wirehouse.


In fact, the really bright types who find themselves at a life general agency will normally send resumes to wirehouses as soon as they realize how restricted they are in the insurance biz.


It's a great place to start--fantastic in fact.  But it's nonsense to suggest that a general agency is a lifetime of intellectual challenge, or even a source of more than a handful of the tools of the trade for a true financial professional.


That's my opinon, not a lie.

Aug 20, 2007 9:46 am
DAtoo:

Am I the only adult who sees, "Forum for FA's Only" and thinks of the Norman Rockwell painting of the little boys in a tree house with a sign that says, "Girls not allowed."


It is amusing that simply talking about the fact that do it yourself investors outperform "Financial Advisors" year in and year out makes so many of the posers crazy.  It's as if they're all huddled in the corner makng noise so that they can't hear the sounds of reality.


For an indication on how immature Joeboy and Indynow are note that not only did they "join" the clubhouse they actually put the clubhouse motto as their signature line.


Two grown me, parading as "Financial Advisors" who waste so much time on this forum, that stupid forum where everybody is a Sergent or a Captain or a Private and now another complete waste of time.


Curiously pathetic and oddly sad.  They'll say they don't care what I think.  Apparently not, but actually going out of your way to appear childish does not reveal a man who is capable of being mature.



Ironic choice of words, Putsy, because that's normally how I think of you....a supposed retired millionaire who spends his time marking up a board for active financial advisors.

You're so arroagant that you can't imagine that some of us who actually work in the profession are tired of listening to your blathering.

Aug 20, 2007 9:47 am

Putsy, I have to assume that you have a high IQ and scored well on tests.  I can't think of another reason why you would think that this is of major importance. 


I believe you that many of the really bright guys send their resumes to wirehouses.  This is because many of the very smart ones are succeeding.  This is a sales profession and analytical types tend to fail.   The smart ones who are succeeding don't go to wirehouses.


Why would a successful insurance person go to a wirehouse?  You do realize that on each insurance sale, their pay will be about 25% of what they were making.   Their payouts on investments are also substantially less if they are part of the RR world.  Many have their own, or work for, RIA's. 


You can have any opinion that you would like.  The lie that I was referring to was the BOM saying that insurance agents aren't involved with HNW.

Aug 20, 2007 9:49 am

This is because many of the very smart ones are succeeding.


The above line should read "are not succeeding"

Aug 20, 2007 10:12 am
joedabrkr:



Ironic choice of words, Putsy, because that's normally how I think of you....a supposed retired millionaire who spends his time marking up a board for active financial advisors.

You're so arroagant that you can't imagine that some of us who actually work in the profession are tired of listening to your blathering.


Yet you not only read it, you respond to it.

Aug 20, 2007 10:15 am
anonymous:

You can have any opinion that you would like.  The lie that I was referring to was the BOM saying that insurance agents aren't involved with HNW.



We all know that the HNV types are involved with life insurance agents--they have them fill out the applications.


"Do you have, or have you ever had, any of the following........"