In 2017, my friends and I left the private wirehouse bank to start our own RIA. Our goal was to make total wealth management a reality for our wealthiest clients and we were determined to support this process with the right infrastructure.
Like many teams moving from a corporate environment to an independent RIA environment, we needed specialized partners to provide financial choice and facility planning opportunities, in addition to back-end services in compliance, technology, and communications. But in another area we struck. Our experience with billionaires and centimilioneas – some first-generation, some with inherited wealth – taught us that life insurance was a valuable tool in helping families reduce tax inefficiencies, grow portfolios, and provide full legacies to heirs.
Nose? High-quality partners who understood the culture and processes of RIA were difficult to find. Instead of privacy and the environment of any traditional insurance is a negotiation so planning, research, research, and management are essential to get the right results. Tax preparation, treatment, and medical records are also required, not to mention the need to continue to review policies and changes after years of implementation. There were many moving parts to the logistics process.
Recognizing the difference in the service in the independent environment, and determined to make insurance strategies part of the wealth management, we created another company that works with advisers and family offices that want to use life insurance as an unrelated product to spend money, income tax income, wealth-based taxes, and risk-advancement for a high-net-worth client. We tested our new service with our RIA clients first and then offered it to a selection of other planners.
The move was very unusual. Today’s insurance industry has dominated many asset managers for decades, yet the two have yet to find a way to work together.
A real estate tax time bomb. In order to determine and provide the best solutions on behalf of the client, a consultant with extensive experience in this area must inspect the property and review the proposed and previously established laws. Such analysis often reveals significant losses or unintended consequences that may arise, for example, when small-scale marketing solutions are poorly implemented for high-cost customers.
Another danger zone: the most affluent customers are international citizens and their families can be spread across several US states. Advisers without expertise in managing various insurance and investment and wealth management tax laws can land their clients in trouble.
Such statements may also reveal tax liabilities that may be offset by life insurance. Many families, for example, do not factor the property tax into their estimates of their income. Throughout life, a person builds wealth, enjoys income, and pays higher taxes on income and capital gains. But after death, the estate may have to pay up to 50% to the IRS, causing chaos if the heirs are forced to destroy a large portion of the estate to do so. Private placement and life insurance products are one of the few tax-deferred/tax-free vehicles around. The ability to grow wealth over time is greatly enhanced by the absence of taxes.
By using the customer’s financial analysis methods and adding to their entered goals, the customer’s true insurance needs are revealed. Our process aims to move advisors and clients from the idea of purchasing insurance to an ongoing relationship with the insurer. Seeing families respond so well to our methods has been one of the most rewarding moments of our journey as a fitness so far.
Matt Celenza is the founder and managing partner at Boulevard Family Wealth and founder of Boulevard Insurance Strategies, whose mission is to bring unique life insurance plans to independent advisors and family offices. Both companies are located in Beverly Hills, Calif.