When I created my own RIA firm on April 1, 2007, my plan was to offer financial planning, asset management and life insurance—when indicated as appropriate by the financial plan. At the time, I expected the fee-based life business would be competitive. However, I found the opposite to be true. Perhaps there weren’t enough fee-based policies to satisfy the law of large numbers needed to make it competitive. Actually, the commissioned products had lower premiums. Although I haven’t checked it in quite a while, I suspect this is still the case.
Over the past seven years, I have placed approximately 15 to 20 life policies, but as mentioned, only when the financial plan indicated there was a need. In other words, I wasn’t trying to sell life insurance.
Recently, I’ve made the decision that I will no longer offer life insurance or any other type of insurance for that matter. Why? There are a couple of reasons.
First, because doing so prohibits me from holding myself out as fee-only in the eyes of the CFP Board (to clarify, I do not agree with the Board’s position on this issue). The second reason is that being fee-only is a competitive advantage with a large number of clients.
What will I do with future insurance cases? One of my clients, who has been referring new clients to me for years, has been in the life insurance business for several decades. He is one of the most benevolent and charitable individuals I know. In the future, I will refer any insurance opportunities I may find to him.