Personal Finance

Sometimes You Have To Innovate By Going Old School

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Fee models are evolving, new customer experience solutions abound, and AI, robotic processes and other innovations are taking the industry by storm. Yes, the wealth management industry is in an extended period of disruption.

To some advisors – financial and otherwise – disruption may be daunting. I’d rather think of it as a time of opportunity. Either way you view this period of change, remember that sometimes you can innovate by going old school.

For instance, many consumers only think of life insurance in a traditional way, but savvy advisors know that there are myriad reasons for owning a life policy, and many reasons to jettison a policy. And multiple ways of doing so.

Unbeknownst to you, your clients may lapse a life insurance policy or surrender it for cash value without realizing there is a secondary market for life insurance that in many cases may garner them more cash. It’s at least worth a policy appraisal, which can usually be had at no cost, before you or your client let them abandon a valuable asset for little to no value.

If they do qualify for and opt for a life insurance policy settlement, the funds can be used for any purpose, and you should be part of that spend, splurge or invest decision too. Even if you are limited in terms of participation in the secondary market for life insurance (some brokerages and insurers tie the hands of advisors on this product line), fulfill your fiduciary responsibility by ensuring your clients have complete information about all of their options.

Better still, be the advisor who not only includes life insurance in your annual review with clients, but who proactively lets them know they should not let go of a life policy without looping you in. Especially during this disruptive period, our industry is increasingly hearing from wealth advisors who want to know how to cultivate their existing books of business to proactively identify dormant, outdated, unwanted or unneeded client life policies.

Whether or not it is for them, clients are impressed by the outreach and additional level of education. They see forward-thinking financial solutions and you may in turn see new revenue opportunities. Additions to assets under management. Some advisors take this a step further to attract new high-net-worth clients.

All this to say, don’t let your clients overlook what amounts to a reverse life insurance policy, akin to a reverse mortgage. And certainly, don’t let them throw the proverbial life insurance baby out with the bathwater.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.