Preserving the value of accumulated wealth is obviously a prime concern for high-net-worth individuals. Typically, this responsibility is outsourced to a wealth management firm that includes advisors making sophisticated recommendations on asset diversification, estate planning and taxes.
As part of their services, a growing number of wealth advisory firms also offer personal and asset risk management and insurance consultations by partnering with an independent insurance agent.
The goal of the partnership is to create a holistic risk management program that identifies known and unknown threats to the client’s accumulated wealth. By developing a client risk profile, the agent can recommend how to mitigate and transfer the related financial exposures.
Both the wealth advisor and the insurance agent benefit from this alignment — the agent augmenting his or her book of business with an important new client, and the advisor providing a much richer set of services to the firm’s clientele.
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I reached out to two experts to discuss their approach to creating a holistic risk management program for their high-net-worth clients.
Maryann Zaleski is an advisor to some of the wealthiest individuals in the world as an executive director at J.P. Morgan Private Bank in Morristown, New Jersey. A veteran wealth manager, Zaleski has long favored partnerships with an insurance agent to handle her clients’ risk management and insurance needs. Gil Lai is a former insurance underwriter who now serves the risk management and insurance needs of HNW clients as an agent with NFP Private Client Group, where he is a managing director.
Zaleski and Lai, who know each other professionally, exemplify the informal partnership trend between wealth advisory firms and specialist insurance agencies, each serving affluent families. The firms retain their operating independence but are joined at the hip when assessing client risk and insurance needs.
As Lai put it, “We’re in a position to add value to an advisor’s repertoire of advice. It’s a two-way street.”
Zaleski concurs: “Insurance is crucial to our clients’ asset protection. It’s important to us to have this partnership with an agent in place.”
It was common in the past for wealth advisory firms serving high-net-worth families and individuals to leave the risk assessment and acquisition of insurance policies up to the client, who separately discussed these matters with the family’s insurance agent. While there is nothing wrong with this scenario, much more can be gained for the client by aligning forces — wealth management and risk management.
Each party often is privy to the changing details in a client’s life and work that will be of importance to the other party. For example, if the wealth advisor learns that a teenaged daughter will be traveling with fellow students to Paris for a short-term study project, this information is valuable to the insurance agent, who can identify and address a wide range of travel-related risks, such as potential political instability, civil strife and health crises.
The agent also can offer assistance with pre-trip physician referrals and medical evacuation coverage, and provide timely advisories on transportation hazards. Many agents have relationships with third-party organizations that offer lost document assistance and emergency translation and transaction services. They also can determine if additional insurance coverage and higher limits of financial protection are required.
Insurance agents not only spot risks, they resolve them.