“Why are you helping the rich?”

I was challenged by someone wondering why I focus my practice on helping families of high net worth, as if it was less noble in some way than helping “normal” families.  The implication was that families of wealth either don’t need, or don’t deserve help with the things I worry about on their behalf.

My first inclination was to say to this person that if you’re lucky enough to live in a place where you can ask me that, or read this blog, or even compare yourself to “high net worth” families, then you’re automatically the wealthiest among billions of other people on this planet, so be careful when you’re being judgmental.

And as I’ve said before, the quality of how you use whatever wealth you have is a better indicator of my interest in helping you than of any given level of wealth.  Based on that standard, I know wealthy families with $300,000 and unwealthy families with $30M, so I’m always careful about labeling people based solely on a dollar figure.

And finally, if you feel there are injustices, inequalities, calls to action, or social responsibilities that deserve our collective attention, where do you expect to find the greatest horsepower for fixing those things?  In my work with families of significant wealth, I’ve seen some amazing things happen because of their passion and their generosity.  This is why we believe:

Financial firewalls → Freedom of capital → Prosperity → Purpose → Passion → Action

5 Elements of a good portfolio

A good risk and insurance plan has the following characteristics:

  1. It’s customized.  Along many points of your insurance portfolio you should be able to point to them and say “yeah, that was made for me and my situation”.
  2. There’s an advocate.  Sometime you’ll need someone who will argue on your behalf with an underwriter who won’t give you coverage, an insurance company who won’t adjust a premium, a claims adjuster who won’t see your side, a mortgage company who won’t accept your policy, or some other agent who’s trying to sell you something that benefits them and not you.
  3. It’s flexible.  You likely don’t have the same insurance needs as you did 10 years ago, so your insurance portfolio needs to be able to pick up the pace to keep up.
  4. It’s frequently reviewed.  Dusty insurance portfolios are dangerous portfolios.
  5. You understand it.  If the reason for building a firewall with insurance is to give you freedom to use your capital for other things, then it’s hard to imagine you feeling peace of mind if you don’t understand what it does, how it will work, and why you bought it in the first place.

We consider it our responsibility to be sure that these 5 elements are included with every portfolio we design, no matter what the plan ultimately looks like.

Photo:  University of Montana, Missoula

Wisdom – why it matters

Wisdom: the power to discern what is true and right by employing learned knowledge

There are times when there’s an obviously clear line between the right answer and the wrong answer.  And other times there’s a continuum of space between a right answer and a more-right answer.  The benefit of having accumulated knowledge and direct experience is knowing the difference between what’s right and what’s more right.

You could have a home insurance policy with just the right amount of coverage to rebuild your house, but maybe instead you could have one with an unlimited amount of coverage and never bear the risk that inflation outpaces your policy’s ability to keep up.  Or, you could have a home insurance policy that will rebuild your home, but maybe instead you could have one that would give you the option to take the equivalent in cash so you could sell the lot and move elsewhere.  Or, you can have a policy that will replace your car, but maybe instead you could have one with an agreed value so there’s no argument about how much it was worth.

Creating the most-right recommendation for families is why we care about the intimacy of our process.  It’s how we highlight the difference between customized and off-the-shelf.

Photo: Rachael McGraw, Gullfoss, Iceland

Justice – why we do it

Justice: guided by truth, reason, and fairness, and made according to principles and equity

How you use and apply what you know in the service of others is your final label and seal of quality.  Most mistakes or ignorance can be fixed and forgiven, but acting without justice rarely is.

Most people are not intentionally unjust, but it takes extra effort to really prove just and worthy intelligence.  What I see a lot are agents trying to win business by quoting apples-to-apples against existing policies, hoping that the lower premium wins the client.  But what if they don’t examine whether the limits of coverage are at the best level for the client?  What if they could’ve reduced coverages for unnecessary items and reduced the premium?  What if they should’ve explained why a different umbrella policy would protect the children better?  Missing such opportunities leaves the scales of reliance and conduct unequal, to the detriment of the family.

The approach that we adhere to is slowing down the process, asking more questions, sharing the entire truth, relating it to the personal needs of the family, and exhausting the opportunity to give away what we know for the benefit of the consumer.  This is when we feel best about what we do.

Photo: Wild Horse Island, Montana

Precision – how we do it

Precision: exercised with definitive statement, exact in position, and exact in measure.

It’s hard to think of an example where “pretty close” works out okay for families when it comes to their insurance.  Insurance contracts are complex financial agreements and there are very real limits, exclusions, and conditions to those agreements.  And there’s usually no flexibility and no budging to try and get more once the loss has occurred, so you’d better be correct from the very beginning.

When we engage with a client we attack the precision of their insurance portfolio first.  Are the limits of coverage sufficient in light of expected losses?  Are all interested parties to the contract named correctly so as to protect their rights and positions?  Is the entire inventory of what needs coverage accounted for and documented correctly – sometimes across multiple policy contracts?  Is the full scope of expected coverages captured in the portfolio, or are there gaps because of a lack of thoroughness when it was constructed?

We believe being precise begins with having a passion for learning what the right answer is, then having the discipline of process to do it, check it, then check it again.  And it’s our tight control over that discipline that winds up mattering the most to our clients when they eventually have a claim.

Photo: Rachael McGraw, Florence

What is an expert?

An expert is an atypically reliable source of technique and skill who delivers their art with precision, justice, and wisdom.

Precision: exercised with definitive statement, exact in position, and exact in measure

Justice: guided by truth, reason, and fairness and made according to principles and equity

Wisdom: the power to discern what is true and right by employing learned knowledge

Validating real expertise from potential expertise requires a test of the behaviors, actions, and delivery of someone’s purported skill.  Education and years of experience are foundational but not definitive, as we all know well-educated professionals who don’t act in the best interests of other people.

Real experts speak plainly about complex subjects, take a stand behind their positions, are indomitable against proprietary interests, serve as stewards of those who rely on them, defend the ignorant against manipulation, and relate stories of experience to what matters to you.

We believe that being precise, just, and wise is the best way to show how much we care, and we’d like the opportunity to share that with you.

Photo: Rachael McGraw, Santa Monica, CA

5-point test of an insurance portfolio

When we are introduced to a family one of our most popular service offerings is an initial report of insurance adequacy that centers on a test of 5 key points.  We call it our R.I.S.K.S review.

Real Estate:  Does the insurance provide a sufficient amount of money to rebuild a home, offer a cash-settlement option, replace contents, and cover additional living expenses if they have to temporarily relocate?

Indemnity from Liability:  How much of a family’s financial position is protected against insurable allegations of negligence and for what activities or actions?

Special Valuable Property:  Are losses to such items as jewelry, art, collectibles, etc. insured correctly in both in the scope of losses covered, and in the extent of recovery expected?

Knowledge of the Underwriter and Agent:  Do the current providers deserve the opportunity given their focus, experience, understanding, and competence?

Squandered Premiums:  Are premiums not merely high, but wasteful in their applicability to the family?

These 5 points are not a substitute for a full review, but when done as an initial set of thoughts, they can often be great launching points into a deeper, more meaningful discussion.

Photo: Rachael McGraw, Amsterdam