What You Don’t Know CAN Hurt You!!!

Everything you ever thought about life insurance agents and their compensation is probably true. The industry is full of agents who take maximum compensation on policies they sell. Very few even discuss compensation amount and structure as a policy design feature.  In fact, it is considered “taboo” in the industry to disclose this information.  In most cases, agents CAN reduce compensation to improve contract efficiency.  If you are aware, you can be an advocate for your client when they’re purchasing or restructuring insurance.

Below are a few facts to consider:

  • Agent compensation is the largest expense charged to a policy during the first ten years.
  • Agent compensation has a direct effect on cash values and long term policy performance.
  • Agent compensation is often directly correlated with the length and severity of surrender charges.
  • Agent compensation has a direct effect on required annual premiums.

 Call or email us today to recieve our one page illustration showing the following:

  • The proposal by our competitor (maximum compensation)
  • WealthPoint’s proposal matching the premium of our competitor (higher cash values)
  • WealthPoint’s proposal matching the death benefit (lower premiums)

 This one page summary discloses the truth about agent compensation and its impact on cash values, surrender charges and premium outlay. The difference is staggering.  Please note, we have used the exact same carrier, client and product assumptions. IDENTICAL!  It illustrates the difference between the compensation in our competitor’s proposal and WealthPoint’s.  Furthermore, it shows how proprietary pricing, made available through WealthPoint’s affiliation with M Financial, is advantageous to our clients.  WealthPoint routinely reduces agent compensation when being referred by a professional advisor.  Whether you or your client are purchasing new insurance or have existing insurance that is in need of a Policy Review, “dialing down” compensation can save them thousands of dollars.

Sibling Rivalry

 Fighting siblings at home is annoying and tiresome, as any parent will testify.  But sibling rivalry in a business can often be downright destructive.

When looking at siblings working together, it is important to consider more than the financial, operational, or strategic points of view.  It is crucial to understand the deeper issues that can reside between siblings and how it could impact the long term success of any business.

Sibling rivalry comes from jealousy and the desire to receive more love and approval from the parents.  These issues can resurface in everyday business where siblings work together and perhaps compete with one another.  This can lead to irrational business decisions, a lack of respect for each other’s input or decisions, resentment of accomplishments or differences, unclear responsibilities, failure to be accountable to one another, and contribute to a negative and/or unproductive work environment.

Siblings are rarely able to deal with their issues, even if they are bringing the business down, without others stepping in.  The issues must be fully understood and communication is critical when working out the issues.  A lack of communication and understanding between each other can be a big cause of problems.

Some Simple Rules:

  • Clarify boundaries between family members (responsibilities, direct reports, hierarchy, voice, etc.)
  • Set up a forum and process for conflict resolution
  • Open communication between family members, even those not working in the business
  • Have agreed upon, distinct roles and responsibilities for each sibling in writing
  • Establish clear compensation policy
  • Create a clear, documented succession plan

 When working well together, siblings can bring a lot of value to the company due to built up trust, shared history, and a sense of loyalty.  It is, however, important to plan in advance with clear, documented roles, responsibilities, and other guidelines and also to be able to identify and promptly resolve instances of sibling rivalry in an open format before there is any damage to the relationships or the business.

WealthPoint Acquires Interest in Financial Modeling Platform

Press Release: 09-03-2010

Media Contact:  Marissa Hopkins, marissa.lynn.hopkins@gmail.com

WealthPoint, LLC, a leading provider of succession, legacy, and life insurance planning to high net worth clients throughout the United States, has acquired a one third interest in a comprehensive financial modeling platform.  The planning tool was developed over the past several years with the input and experience of certified public accountants, chartered financial analysts and corporate controllers.  “We took all of this experience and incorporated it into the most powerful and flexible analytical tool available today,” said WealthPoint design analyst and platform founder, Drew Velasquez.

In today’s competitive and often uncertain economic environment, business succession, estate and personal financial planning have become more important than ever. However, in most cases, planning of this magnitude goes unattended due to the complexity and time required to adequately analyze and execute a plan for the future.

The modeling software is a sophisticated tool to be used by clients and their advisors to make complex planning and decision making easier. “The client will be able to make complex planning decisions with confidence,” said WealthPoint Managing Director Ryan Barradas. “It helps clients navigate through the keep or sell decision making process, decide the right time to transfer equity and/or control in business interest, transfer excess wealth and manage cash flow.  It takes a holistic and multidisciplinary approach to planning for both business and personal assets.”

“Throughout my 36 years of practicing law, I have always looked for a tool like this,” said Jim Ryan, an estate and trust law specialist with Frazer, Ryan, Goldberg & Arnold LLP, who was given a demonstration of the software.  “Instead of guessing, it uses sophisticated projection technology to show the client likely outcomes.  It will be very helpful to me, my clients and anyone who does what I do.”

“I have seen many programs in the past that have attempted to do the same thing, but never one that provides the depth of information and knowledge, along with the flexibility to change assumptions on the fly.  It’s built on an excel platform that allows it to be quite nimble and customizable,” Jim Ryan said.  “And more importantly, clients understand the results and gain a clear understanding of their options immediately. This software has been carefully designed with detailed attention to the tax, legal, debt, financial and personal issues related to any comprehensive estate, business succession or financial planning process.”

Future plans for the software include an addition of a web platform to allow for efficient communication between the client and advisor team, project management capabilities to assign tasks, a secure place to store important planning documents for review and a private blog for advisors to propose plan designs and changes.

About Drew Velasquez

Velasquez is the head of the WealthPoint design team. He began his career in public accounting in Seattle while specializing in the issues that affect corporate and personal income taxes, ownership transition, value realization, strategic management and tax structures of closely held businesses. He has personally consulted with hundreds of clients regarding strategies ranging from simple estate documents to negotiating on behalf of clients for the sale of a business. This diverse background allowed him to develop a proprietary consulting and planning software tool that has become the cornerstone of making informed strategic decisions for both privately owned companies and their respective shareholders.

Dealing with the Press During Family Crisis

Family feuds can be thrilling to the public, especially if the family feuding owns a prominent business together.  Reporters may come knocking if they get wind of division, trouble, or even tragedy within the family or business.

It is important not to be caught by surprise and say something that might later be regretted when a reporter calls due to do not being prepared.  This is why it is important to think about crisis communication before it is needed.

First, owners should know that they do not have to speak to reporters.  A reporter’s job is to get information, so the reporter may make you feel as if you must return phone calls or talk to them, but this is not true, no matter how adamant he or she may be.

Second, there are communication professionals that can help handle the press in times of need.  Communication experts can act as a liaison between the owner and reporters, releasing statements and answering questions.  If the business is large enough, it may already have a corporate communications department to which questions can be forwarded.  Also, there are specific crisis communications experts who can manage press during a crisis situation.

Some acceptable answers if owners do choose to engage a reporter, but are faced with questions they are uncomfortable answering are:

  • I prefer not to speak about that at this time.
  • That is a personal and private family matter.
  • That information is confidential.
  • I have no comment.

Also, if speaking to a reporter, assume everything said is “on record.”  It is better to be safe than sorry by thinking something said is “off the record” or “background,” only to see it show up in print later.  If you do not want certain information to go public, then do not mention it.

It is important to know when the story is scheduled to run so owners can be sure they are not caught unaware by the article.  Sometimes it may the run next day, other times not for a week.  For those quoted, it is good to know when others will be reading about the event and possibly asking more questions.

Finally, it is important to know who else a reporter spoke to about any situation.  Good reporters aim for balanced reporting and will try to get multiple sides to any story.

Marissa Hopkins, Communications

Lawyers Ask Treasury to Set Two-Generation Limit on GST Exemption

 AALU has learned that at least four attorneys in academia and private practice have written to the Treasury Department asking that a durational limit – suggested to be two generations – be placed on trusts that qualify for the generation-skipping transfer (GST) tax exemption, thus eliminating the incentive to establish so-called “perpetual dynasty trusts” in jurisdictions that have abolished the common law “rule against perpetuities.” The Treasury correspondence was submitted by Gregory S. Alexander of Cornell University Law School, Raymond H. Young of Young & Bayle (a Boston law firm), John H. Langbein of Yale Law School, and Lawrence W. Waggoner of the University of Michigan Law School.

Click here to view Washington Report 10-81

WealthPoint Hires Five New Employees for Succession, Legacy, Insurance Planning Business

WealthPoint LLC, a provider of succession planning, legacy planning and life insurance planning to high wealth clients throughout the United States, today announced it has hired five new employees. The company was formed in May 2010 by Managing Director Ryan Barradas.

“When you launch a new business it’s critical to surround yourself with top people, and that is what I believe we’ve done with these five professionals,” said Barradas. “All of them have experience in financial services and will work internally and externally to ensure WealthPoint delivers exceptional client service.”

The new employees include:

  • Joe Worden, Director of Business Development. Worden is charged with overseeing and growing the firm’s marketing efforts and strategic relationships with corporate partners and associations. He has extensive experience and expertise in the areas of private equity, mergers and acquisitions and business development. Joe has spent 14 years in corporate finance and business development, with the last six focused specifically on legislatively driven distribution challenges in the financial services industry.
  • Valerie Juhl, Client Coordinator. Juhl is responsible for the development and management of day-to-day operations, workflow/case management and administrative support. She has a background that includes mortgage banking, graphic design and business.
  • Kathy Grenert, Director of New Business and Policy Service. Grenert is responsible for client services, new business administration, and medical underwriting. She has 30 plus years experience in the electronics industry, sixteen of those as owner of Southwest Sales, Inc., a manufacturer’s representative company serving the semiconductor industry.
  • Drew Velasquez, Design Analyst. Velasquez heads the firm’s case design team. He began his career in public accounting in Seattle while specializing in the issues that affect corporate and personal income taxes, ownership transition, value realization, strategic management, and tax structures of closely held businesses. He has personally consulted with hundreds of clients regarding strategies ranging from simple estate documents to negotiating on behalf of clients for the sale of a business.
  • Shelley Forman, Controller. Forman handles the firm’s day-to-day accounting duties, financial analysis, and business operations. She started her career in Boston as an auditor with KPMG, specializing in mutual funds and real estate investment trusts. Since that time, she has held Accounting Manager and Controller positions with two publicly held technology companies including work on two initial public offerings.

Is the “Premium” worth the “Premium”???

Life insurers have fared well relative to banks in the recent economic meltdown and recession. Further, life insurers have fared well even when compared to historical average failure or impairment rates.  We find a lot of clients looking to the highest quality carriers for their life insurance solutions which would seem very prudent, but…is the premium price worth the perceived risk avoidance? Is a Northwestern Mutual or New York Life really that much better than a John Hancock or Pacific Life? The fact is they are all great companies.  Let’s look at the relatively low historical failure rates for life insurers.

History of Life Insurer Impairments

A.M. Best has historically tracked U.S. Life & Health (L&H) insurer impairment rates.  From 1976 until 2008 the averaged impairment rate was 0.88%.  In 2008, the impairment rate was 0.46%, below the average for the period.  Even during the period when impairment rates peaked (1989 until 1991) in which nearly one-third of all impairments for the study time period occurred, the rate reached a high of only 3.1% (in 1991). (Please note that the data includes both life and health insurers.) 

What you need to realize is that the overwhelming majority of life insurers that fail are small companies with $20 million or less in capital and surplus.  The average annual failure rate for those companies is 2.28%, 76 times greater than the failure rate for companies with capital and surplus in excess of $500 million (0.03%).  M Financial’s Carrier Partners each have capital and surplus in excess of $500 million.

So, is it worth the excess premium to purchase product from the absolute highest rated carriers to achieve a 0.03% perceived reduction in the underlying companies risk of financial failure???  Only you can answer that question.  The purpose of this information is to give you a clear picture of the statistics behind the decision so you can both buy competitively priced products and sleep at night.  Do your homework and look at both financial strength and performance.  If a company is among the top in the industry and has a competitively priced product, it will more than likely be a good decision.  

Sens. Kyl, Lincoln Introduce Estate Tax Bill Amendment

Sens. Blanche Lincoln (D-Ark.) and Jon Kyl (R-Ariz.) Tuesday night introduced an amendment to the bill which would permanently reform the federal estate tax. The amendment would permanently set the estate tax rate at 35 percent, with a $5 million exemption amount phased in over 10 years and indexed for inflation.  It would also provide a “stepped up basis” for inherited assets.

Lincoln posted a message about the amendment on her website in which she said:

“It’s time to take decisive action on the estate tax, and provide the permanent solution that Arkansas’s hardworking farmers and small businesses are desperately seeking,” Lincoln said.  “Uncertainty in the estate tax law has caused incredible difficulties for these individuals, which is why I have fought for a quick resolution to the issue that is both permanent and fair. One way to improve upon an already strong legislative initiative that includes tax incentives and a number of other benefits for small businesses is to ensure that we reach a permanent solution on the estate tax to provide small business owners and farmers with the certainty they need.”

If Congress does not act this year, the federal estate tax is scheduled to increase to 55 percent with only a $1 million exemption at the beginning of 2011.

WealthPoint LLC Opens Phoenix Office to Provide Succession, Legacy, Insurance Planning

Press Release: July 15, 2010

WealthPoint LLC, a provider of succession planning, legacy planning and life insurance planning to high wealth clients throughout the United States, today announced it has opened an office in Phoenix and has begun working with affluent families and middle-market, family-owned and controlled companies to provide comprehensive planning solutions.

The company opened the doors to its new office in May at 3131 E. Camelback Rd., Suite 330. The firm currently employs six, including Founder and Managing Director Ryan Barradas.

“What differentiates WealthPoint from other planning firms are not just the strategies, tactics or techniques we suggest, it’s the questions we ask,” said Barradas. “Even more important, we listen to the answers. We help our clients to identify clear objectives that act as the foundation and roadmap of each individual plan.”

The firm is one of only two Arizona based affiliates of M Financial Group, one of the nation’s leading financial services companies with a network of more than 125 member firms across the country. M Financial provides a broad range of financial products designed and priced specifically for affluent individuals, corporate executives, entrepreneurs, and Fortune 1000 companies.

Barradas has more than 15 years experience and background in business, finance and insurance. He is a nationally-recognized expert in family business, ownership and management succession planning, exit strategy planning, complex estate planning, and key employee retention. He is a sought-after speaker on these issues and has spoken to many groups including the World of Concrete, National Electrical Contractors Association, American Society of Concrete Contractors, and WIT (a plumbing distributor association).  Barradas is a member of the Family Firm Institute (FFI), Central Arizona Estate Planning Council (CAEPC) and the Association for Advanced Life Underwriting (AALU).

“WealthPoint is committed to helping clients achieve clarity in their legacy and succession planning,” said Barradas. “We pride ourselves on asking thoughtful questions, listening intently to the answers, building consensus around comprehensive solutions and taking responsibility for their implementation and execution.”

About WealthPoint LLC

WealthPoint LLC is headquartered in Phoenix, Arizona and specializes in providing a holistic approach to succession, legacy and life insurance planning. WealthPoint serves affluent families and middle-market, family-owned and controlled companies throughout the United States. The company’s unique process combines thorough discovery, collaborative and flexible solutions, and an unbridled commitment to implementation and on-going support. WealthPoint is an Affiliate firm of M Financial Group, one of the nation’s premier financial services design and distribution companies, serving the ultra-affluent and corporate markets through an exclusive network of more than 125 of the nation’s most successful and innovative financial services firms. More information is available at www.wealthpointllc.net.