Life Insurance — The Often Missed Opportunity For Wealth Management …

For those accounting firms that embrace wealth management, the focus of their efforts, many times, is on asset management. There are a number of reasons for making investment advisory services central to their efforts including:

  • Consistent revenues: Investment management is a retainer business compensated by success. Over time, the accounting firm can accumulate substantial assets under management resulting in reliable and significant revenues.
  • The bull market: With the indices periodically reaching new heights, investing monies is appealing as the appreciation of client’s assets results in more revenues without the need to attract new clients.
  • Client insight: Many accountants know how a client is doing when it comes to investing. This provides them the possibility of capturing assets from underperforming financial advisors.

While there is no question that wealth management accounting practices can do very well delivering investment advisory services, it is not uncommon for these same practices to miss another – and sometimes greater – revenue source… life insurance. What is also very important to note is that by failing to address the life insurance needs of their clients, the accountants are actually doing them a disservice.

According to Joe Tarasco, CEO of Accountants Advisory Group, a consultancy specializing in maximizing the value of CPA firms, “Wealth management practices at accounting firms can best serve their clients by providing the range of services and products. Discretionary money management, retirement plans, and life insurance are the three core categories these practices should be concentrating on.”

Accounting firms often have a structural advantage over all types of competitors when it comes to providing life insurance. For example, in the case of successful business owners – the largest market for wealth management services – accountants are the professionals they most readily turn to for a range of advice. As with investment advisory services, accountants regularly have client insights to see where they can add value. Furthermore, the interrelationship between taxes, advanced planning, and life insurance favors accountants.

One of the bigger obstacles for accountants – especially those in smaller firms – is that the mechanics of providing life insurance can be complicated and outside their areas of expertise. This is especially the case with more complex scenarios. However, there are a number of different solutions to this conundrum including acquiring the expertise and housing in the accounting firm, and doing joint-business with a high-caliber life insurance producer.

The joint-business approach requires accountants to adroitly oversee and drive the process. “While we bring the ability to address any life insurance need, when cooperatively working on client situations with accountants, there is never any question of who’s in charge – they are,” explains Frank Seneco, President of the advanced planning boutique Seneco Associates, a go to life insurance resource for accountants and attorneys and author of Maximizing Personal Wealth: An Advanced Planning Primer for Successful Business Owners.

What is clear is that a solid number of accounting firms in the wealth management arena are missing out on better serving their clients as well as generating more revenues for their firm by not putting in the requisite resources and effort to provide high quality life insurance solutions.

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Tuesday, April 28th, 2015 EN

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