Regardless of the shape of future financial regulation, it’s clear that clients are increasingly
expecting advice on more of their mon-ey-related issues than just investments.
To make sure you can continue to attract
and retain these clients — and they don’t
turn to rivals or software for answers —
it’s important that you identify and analyze the wide range of financial risks and
challenges they face.
Of course, some of those risks may
lie in areas where you, personally, don’t
provide a solution. But that’s not a negative or even a stumbling block.
Having access to a wide network of
experts with specific asset protection
skillsets may help reinforce a client’s
overall financial portfolio with tools
that can help secure long-term financial
health and stability.
For financial advisors, an often-neglect-ed area of wealth management involves an
understanding of their clients’ property
and casualty protection needs. Over time,
especially as a client’s wealth slowly builds
and properties and non-financial assets
are added and insured incrementally, a client’s risk profile can change significantly.
They often need to supplement their
core personal insurance policies covering
their home or homes, cars, personal liability and valuable possessions. Clients also
may need specialty policies, such as those
covering boats and other watercraft, if
they have acquired those leisure items.
Sometimes their policy limits must be
increased, and other times specific features of their policies — which often are
difficult for clients to understand because
policies tend to contain specialized insurance terms — need a thorough review.
These policies include details like “all-risk”
versus “named risk” coverage, extended
replacement cost, agreed value and world-
wide coverage, which can be confusing.
Over time, four common gaps often
arise in your clients’ protection:
• Valuation gap: This arises from
your clients’ insurance being based on
incomplete or inaccurate valuations;
• Replacement-cost gap: Long-held
policies often don’t account for the
cost to fully replace your client’s home
or other valuables, which they likely
believe are fully insured and protected;
• Appraisal gap: Very often, your clients’ valuable items are being protected
at below-market values because they
haven’t been reappraised or reassessed
in years. This frequently happens in
connection with art and jewelry;
• Cap gap: The current caps on your
clients’ liability insurance policies often
are too low, and may be structured in ways
that may hinder their legal defense needs.
Very often, your clients may have
acquired their property and casualty
insurance coverage, perhaps from several carriers, in an episodic way over
time as they bought homes, cars and a
variety of possessions.
While that piecemeal approach to
insurance may have made sense at the
time, a comprehensive review of their
coverage often can lead to economies and
improvements in protection.
Considering how quickly the lives
and assets of successful individuals and
families can change, it’s my view that
their coverage needs should be reviewed
yearly. Under the direction of a trusted,
licensed property and casualty independent insurance agent, a thorough review
of your clients’ property and casualty
coverage should include:
• Evaluation of the client’s risk profile
and their potential for loss;
• Analysis of their current coverage
and a review of whether their policy
or policies provide the comprehensive
protection the client needs;
• Analysis of the client’s current insur-er and whether their services, terms and
financial strength are right for the client;
• Recommendations for policy limits
and specialty coverage;
• Recommendations of loss-control
measures that would help limit potential
property or liability exposures. A deeper
understanding of the details of some of
today’s protection plans can help minimize your client’s future exposure.
A review of property and casualty coverage is not what most financial advisers
do, but playing a part in such a review
offers a unique and potentially rewarding
way to add value to the services you offer.
Remember, property and casualty
coverage is asset protection. Saving
even one client from a financial catastrophe through such reviews is reward
enough. If you have any questions
about this subject, please email me at
Fran O’Brien is Division President, North
America Personal Risk Services, Chubb.
WEALTH & RISK
By Fran O’Brien
An Often-Missing Dimension
Looking beyond clients’ financial needs and keeping them up to date on
policies can help them avoid catastrophes