Month: February 2019

Most all of the wealth advisors I’m fortunate to know and work with consider the fiduciary standard as the only real standard by which they’d ever want to work.  I would imagine my friends face particular difficulty responding as a fiduciary to the question “what insurance do I need?” because a) most of the expertise in insurance rests with agents (meaning they can’t be fiduciaries), b) insurance contracts are confusing (dare to read your own policies?), and c) the rating and underwriting of most insurance companies are neither transparent, nor intuitive.

The generally-accepted response to this difficulty is for a wealth advisor to align with an agent who does good work and then expect their clients to be well-advised and well-serviced, which works great when the client is new and the insurance-review is new and the policies are new.  But there’s danger to the fiduciary the day after new insurance policies are written because 9 times out of 10 they’ll be the first ones to learn of a situation where their clients have put their insurance in jeopardy, and have they developed the process to notice and handle it as the fiduciary standard might require?

I’ve kept track of 45 recent occurrences (I have a list to share with whomever wants it) when a family did something that put their insurance in jeopardy and we just happened to learn about it.  This means that in the time before we knew and responded, there was a problem that, had there been a claim, no one would’ve been happy.  The point is, I believe the secret to a better fiduciary response to a family’s insurance needs isn’t for fiduciaries to become agents and vice versa, it’s for a process to be adopted within a fiduciary firm that can identify, catch and respond to the everyday occurrences that ruin insurance coverage because insurance is way too complicated.  This is my latest passion and endeavor.

In the most admirable way, fiduciary advisors work for the best interests of their clients and as a by-product, wind up carrying more hidden business risk than they realize just by not recognizing the consequential severity of those everyday occurrences.  The blame lies with my industry for creating barriers that would otherwise make insurance easier to understand and address.

Photo: Joshua Tree, CA