From the June 2009 issue of Wealth Manager Web • Subscribe!

Playing It Safer

Boomers certainly have the earning power to invest in their pursuits. More than 26 million are now in their peak income-earning years--ages 57 to 63--and 50 million more will cross that threshold by 2021. However, the inevitable physical decline that comes with aging may slow them down.

That's a hard reality for any mid-lifer to accept, and harder still for the well-to-do. Their generation jumpstarted every major recreation and fitness craze in recent decades, from the Hula Hoop to jogging to the daily gym workout. And this group hasn't been gentle on their bodies while chasing the latest adrenaline rush. Those aged 50 to 59 years account for 12% of hip and knee joint-replacement surgeries. Still, boomers--who are expected to live much longer than their parents--may be right to re-brand 55 as the new 40.

Studies show that as we age, active lifestyles keep minds sharp and improve emotional well-being. However, as mentioned previously, the picture isn't all sanguine. In addition to the threat of injury, there is the threat of increased property and liability exposures. The questions to ask boomer clients with lots of green and a little gray are: How can I actively enjoy each day without deleterious impact to the quality and quantity of the years left? And, how are my recreational choices increasing my personal liability exposure?

Just (think before you) do it!

No matter what generation a client belongs to, managing risk may require a change in mindset. But it can be more difficult to try to change the mind of an older client whose risk tolerance has been a plus in building net worth. Luckily, wealth managers are well positioned to have the conversation that sets the stage for a referral to a qualified risk management expert.

Let's say, for example, that a wealth manager is meeting with an avid skier. A thoughtful exchange about Natasha Richardson--the actress who died from what first seemed a minor fall at a luxury resort in Canada--can provide entr?e to discussion about special insurance coverage and support services that will transport the injured individuals from a remote area in one country to the best medical specialists in another. (Richardson was ultimately jetted to a New York hospital.)

Such conversations can help gauge clients' tolerance to physical risk. Are they still in touch with their inner, invincible 17-year-old selves? Do they fancy themselves on-the-fly learners? Will they think nothing of rumbling off on a $30,000 Harley, though they never learned how to handle a 700-pound bike? Will they jet to Kilimanjaro with climbing gear still in its store wrapping and without ever having taken a mountaineering course? Money holds no currency at 19,000 feet, or in any other risky situation that pits man against nature or machine. The late-life adventurer needs more than treadmill time and a six-figure credit line to survive Mount Kilimanjaro, for example, where routinely 15 people go up, five make it to the summit, and some don't make it back down at all.

Just as clients value their wealth manager's experience, they should be encouraged to seek out the experienced instructors and guides in their chosen activities. They must recognize protective equipment isn't nearly as critical as being aware of the potential dangers. Consider a dot-com founder who shows up at a Porsche Club amateur racetrack to see what his Carrera "can really do." Before rushing onto the track, he would be wise to invest in some high-performance driving classes. He also should investigate whether his auto insurance policy excludes racing--as virtually all insurance contracts do.

Motorcyclists should remember that helmets are lifesaving devices and that car and truck drivers often pay them less attention than they should. A 2007 U.K. study by Nottingham University's School of Psychology found: "At far distances, motorcycles were spotted less than cars, and correct response times were slower." Moreover, motorcycle-related fatalities on U.S. roadways have risen over the last 10 years as the overall motor vehicle death rate has fallen, while the size of vehicles and distractions to drivers (e.g. cell phones, global positioning systems and personal digital assistants) have grown.

Safety on land and at sea

More attention also should be paid to motorized boating risks. After all, it's virtually impossible to stop these brakeless multi-ton vessels from collisions other than by slamming the engine into reverse. But even if the captain has mastered that maneuver, less capable or careful neighboring boaters must be considered. By Coast Guard calculations, U.S. boating accidents caused damages in excess of $50 million in 2007, with "operator inattention, careless/reckless operation, passenger/skier behavior, excessive speed and alcohol use" among the top five causes for nearly 3,700 injuries and 700 fatalities.

Basic safety training for boaters and more intensive safety training for crews of larger vessels are essential to preventing loss. More than 400 deaths in 2007 involved a drowning in which a lifejacket wasn't worn. This statistic is symptomatic of a larger liability: Hosts are often reluctant to lay down the rules for guests. As with motorcycles, watercraft insurance should address the likelihood that other at-fault parties lack sufficient means or liability coverage, leaving those with the deepest pocket stuck with the costs of injury.

Whether the toys are jet skis or ATVs, somebody needs to be the grown-up. Ideally, that somebody should invest time well in advance, consulting with a risk expert to consider worst-case injury and liability exposures. Finally, everybody--be they 50 or 15--needs to maintain a grown-up respect for physical risks. Before a client lets others use his or her toys, the experience and insurance they have--or lack--must be factored in, and hard ground rules for competent, safe conduct established. This may seem obvious, but the more affluent the clients, the more socially reticent they will feel about telling others in their circle "no." It's far better to ensure that the experiences of a lifetime don't end in a nightmare.

Andrew McElwee ( is executive vice president of Chubb & Son and chief operating officer of Chubb Personal Insurance.

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