In most fields, high net worth individuals are demanding clients. They thoroughly vet their wealth advisors, attorneys and accountants and insist on superb service. But that rigor often disappears when it comes to insurance.
The problem is, most wealthy people don’t pay close enough attention to their risks and are complacent about mediocre service from their insurance providers. Many individuals consider these providers commodities as opposed to critical players in their and their family’s well-being. The right insurance, however, is critical to a wealth portfolio, but can frequently turn out to be a blind spot.
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Almost three quarters of high net worth individuals get their coverage from mass-market insurance companies while others rely on publicly traded or private equity backed insurance brokerage firms that are subject to shareholders’ mandates of efficiency and increased revenue. Service to clients of these firms often suffers as a result.
In regulated markets like insurance, service is what makes the difference. For wealthy clients, bespoke service is particularly important due to frequent changes in high-value assets. An astute insurance advisor will apply the same rigor to risk management as a wealth advisor brings to choosing investments. Simply put, independent insurance advisors are more likely to invest more effort, time and knowledge in serving the needs of every single client because they don’t face the pressures that bear down on affiliated firms. Another consideration is to seek a proactive insurance advisor who not only has long-standing relationships with insurance companies that focus on high net worth individuals, but also with financial services professionals who will provide affiliated services, such as wealth advisors, estate attorneys and accountants. Done correctly, proper risk management will provide the bow of protection that wraps the box of strategic financial advice from all angles.
Done correctly, proper risk management will provide the bow of protection that wraps the box of strategic financial advice from all angles.
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An important marker of quality service is comprehensive communication, well in advance of renewal season. At a minimum, a good insurance advisor will have a discussion with each client once a year to see what life changes have affected his or her risk profile. This personal risk review happens before the client’s renewal notification arrives. This preparation allows clients the time to make decisions and the advisor the time to take action. Recently, consolidation in the insurance marketplace has resulted in fewer choices and higher rates, but a great broker will propose ways to mitigate a client’s expense far in advance to optimize that client’s premium dollar.
Tailored service often involves minute details. All too often, high net worth clients are hurt by brokers that neglect to add a newly acquired asset that is not covered on a current policy. This neglect on the part of the broker can jeopardize assets as well as more overarching financial goals.
Fundamentally, service must also be strategic, making sure that a client’s coverage is well designed. No matter how tactical or strategic the challenge, your insurance advisor should work energetically to meet every risk challenge that comes your way.
This article was originally published in the June/July 2016 issue of Worth.
