Adding ‘money in motion’ to your client’s solution
by Wm. Scott PageMr. Page is CEO of PolicyAppraisal.com and LifeGuide Partners, LLC, which provides education and perspective to seniors, their loved ones, and advisors as they consider retirement options and research untapped financial strategies. Visit www.policyappraisal.com
It’s no secret that policy appraisals and life settlements can now offer non-reportable fees for agents and advisors. The marketplace has evolved over the years, and the nature of the transaction provides an interesting way to offer financial advice to clients and earn some extra cash at the same time – with very little effort.
The proceeds of the settlement can then be put to work, and it becomes a whole new level of “Win-Win” transaction. We like to call it the double dip (and some have even suggested they call it the triple dip), but no matter how you scoop it, these transactions are great for clients and their savvy agents and advisors.
First Dip: Life Settlement Commission
First, let’s talk about the life settlement transaction. The vast majority of clients who perform a life settlement do it out of necessity. They are either facing increasing and onerous premium payments, or they are considering dropping their coverage altogether. For agents and advisors, this simplified transaction can turn out to be non-reportable found money (the best kind). The client gets a check for something they thought might be holding them down for years or that they thought had no value. The agent or advisor brings a policy appraisal to the client, who gets a great payout – and they earn some extra cash. This is the first “dip.”
If the agent wrote the appraised policy that gets purchased, there’s a bonus, the policy will stay in force, and therefore any residual payments will continue. That could be considered another dip, but for today’s conversation, maybe we just call it some extra sprinkles.
Along with the financial windfall for the client, the agent or advisor is also a hero. In this scenario, we already mentioned found money and that advisor is offering a financial lifeline that the client didn’t even know existed. But think about how valuable that transaction is from a relationship perspective and a marketing perspective. The advisor has turned nothing into something for a client who is now likely to tell their friends about it. So not only have the advisor delivered a financial reward, but they have also improved the relationship.
Second Dip: Money in Motion
For as long as I can remember, I have heard financial advisors tell me that they are always looking for money in motion: someone who just sold a business, received a retirement payout, received a big inheritance, or other instances. This brings us to the second dip: With this financial settlement, the agent has actually just put money in motion.
Agents and advisors love these situations because they are dealing with “new” money that needs to be placed. The life settlement is the money in motion that the advisor can now, for example, add to assets under management and therefore increase fees and improve the client’s potential to grow their portfolio. Again, the agent is the hero.
The settlement could also be used to fund another insurance product, or perhaps an annuity, and the advisor would earn another commission and remains the hero.
If you put them into a better product, then you’ve put them into a better position for the future. Again, the client had something that they thought was worth nothing – and now they have something that might be kicking them a monthly payment for the rest of their lives. The agent gets the commission and also develops tremendous goodwill with the client.
Bonus Dip: Opening New Doors
The third aspect isn’t technically a dip, but it’s important to note that a policy appraisal gives agents an opportunity that otherwise didn’t exist. A policy appraisal gives an advisor a reason to reach out to clients who they may have not heard from in a while, who they have lost touch with, or who have shut their door to them. The potential life settlement gives a reason to knock on a closed door and potentially grow their book of business.
A policy appraisal and a life settlement offer a multitude of opportunities for agents and advisors. Few transactions bring cash to a client while also generating goodwill and trust – that’s the true double dip.