Matthew Celenza, an innovative advisor in the posh Golden Triangle of Beverly Hills (think Rodeo Drive), is providing his billionaire clients with bespoke life insurance solutions that function as family banks outside their estates. They allow the ultra-high net worth to spend more now, build legacy and “disinherit the IRS.”
Insurance can be “an incredible active asset class,” the $1 billion RIA tells ThinkAdvisor in an interview.
The advisor, who is making something of a name for himself as a disrupter in the private-placement life insurance arena, solidifies client relationships by stressing the importance of advance planning and the predictable return insurance can bring. That approach makes it easier to acquire assets on the wealth management side, he says.
With private placement, the policyholder controls the investment component and benefits from significant tax savings, according to Celenza.
After building an ultra-high net worth book during two decades with Morgan Stanley; Smith Barney, where he was a founder of the Citi Family Office; and Merrill Lynch, Celenza, 52, left Merrill two years ago with about $700 million under management and a contract with Dynasty Financial Partners for support in his new venture.
From the RIA’s stylish “Mad Men”- type designed offices, he focuses on super-affluent clients in the fields of real estate, private equity and technology. His minimum: $100 million. The firm’s minimum account is $25 million.
Celenza has even taken the “Mad Men” theme so far as to outfit his personal office with a bar to serve clients drinks at day’s end in a comfortable, genial setting.
Now he’s marching into the B-to-B business by rolling out an assisted-sales model of his insurance approach to other big RIAs around the country, for which he’s poised to hire a number of specialists.
ThinkAdvisor recently interviewed Celenza, on the phone from his Wilshire Boulevard office. The Upstate New York native discussed how, when just a rookie, he quickly went from zero assets to serving ultra-high net worth folks, how he keeps both ex-spouses as clients after they divorce, and why he shuns cuff links and shiny shoes.
Here are highlights of our conversation:
THINKADVISOR: One of the differentiators of your advisory practice is that you own an insurance company too. Please talk about that.
MATTHEW CELENZA: The business of my wealth management company is being driven by the insurance company. We view insurance as an asset class, not just a stagnant investment for death.
What’s your strategy with insurance?
When we bring a client through the insurance company, we try to inspire them to think outside of their estate. We just don’t talk about the transaction of life insurance.
What else do you discuss, then?
Taxes, lending, legacy planning [etc.]. We bring in attorneys and tax professionals. We do a deep dive within the insurance company, and that’s where the relationships are solidified. When clients see the value of advance planning, it’s much easier to get their assets over to the wealth management side.
What prompted you to start an insurance company?
When I was at Smith Barney Citigroup Family Office and the Private Bank, I realized that life insurance was an incredible active asset class that could give a predictable return to help build legacy. That meant the more you were able to build in these accounts for the next generations, the more you could spend while you’re alive.
What specific advantages and benefits come from looking beyond the estate?
It [amounts to] a family bank that’s immune from estate tax. With private-placement life insurance, you handle the investments yourself. So over many years, they grow to be a lot larger than the actual underlying insurance.
How have you structured your insurance company?
I have a partner in that company [Andrew Aiello] who’s been in this business for 35 years. We started a brokerage general agency [BGA]. But we’re not agents for any insurance company; we just have contracts with about 30 companies. We’re able to scour the market for good opportunities to help build these legacy plans.
Do you plan to expand the insurance unit?
It’s growing fast. Now we’re starting to do B-to-B business with other large RIAs around the country. If they have a client who needs insurance, we’ll send someone into their office to assist them in getting that sale made — there’s enough margin for both of us. We tell [the RIAs], “If you really want to solidify a relationship and make it last for years but don’t go down this path, someone will come in and take [that business] from you.”