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

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“So, Darren, what do you do?”

I protect wealth against the consequences of unfortunate events, lawsuits, and unscrupulous people.

I work best with families who:  1. Are excellent at what they do, but outsource intelligence to others who are excellent at what they do.  2. Are interested in learning and understanding the details behind important financial decisions.  3. Act upon good advice.

The most opportune times to involve me are:  1. During a comprehensive financial plan or review by a wealth manager.  2. Prior to a major liquidity event (home purchase, business sale/purchase).  3. When changing the titling or ownership of assets (Trusts, LLCs, generational gifting).

I’m motivated by:  1. Being precise in the advice that I give. 2. Being just and principled while acting for the benefit of others.  3. Being wise in not just the use of knowledge, but in the creation of it.

I do what I do because I know first-hand how much planning, time, and discipline it takes to provide for your family and grow wealth.  So I care deeply about protecting what it took great effort to build.

Photo:  Rachael McGraw, Manhattan Beach, CA

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Finding an insurance company’s talent

 

One thing we’re trying to do a better job of is pushing the underwriters with whom we work to describe for us what their ideal client looks like.  Insurance is not supposed to be a consumer good like an iPhone or a refrigerator, it’s supposed to be a customized financial arrangement where one party pays for the losses of another.  And I think in an agreement like that both sides should know the other side as much as possible.

Some insurance companies are better at predicting future losses for large groups of drivers (more stable premiums), others are better at concierge claims (only a very few, unfortunately), others are better at being flexible in their underwriting tolerance (old-school common sense), and others are better with technology and customer-facing efficiencies.

No insurance company is good (yet) at all of those. But they all think they are.  So the point of us asking them about it is to create a level of accountability to our office and to our clients.  We’d actually love it if one were honest enough just to say “we aren’t efficient yet, but we’re the best at claims adjusting”, or “we’re pretty generic with claims, but we’re the most affordable”.  At least then we’d feel in partnership because we could match consumers and what they need with the stated strategy of the insurance company.  Matched expectations are always best.

We’d love to tell you what we think each insurance company really stands for if you’d like, and we’ll tell you what we think we’re good at, too.  Now we’re trying to see how honest insurance companies can be with their own self-reflection.

Photo: Joshua Tree, CA

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My mom and the drive for betterment

I’ve said before that one of the ways I test whether I’m doing the right thing is to consider whether I’d want what I say and do to be said and done for the benefit of my mom.  Would my mom be best served by following the advice that I give?

The reason I mention this is to draw-out something unique in that test.  Most people are genuine and honest and would say that they also only give advice that they’d want their mom to follow. But what I see so often is that the quality of the advice given, even with good intentions, is just so poor.

If the advice is well-intended but poor in quality, then it’s not good advice.  And when people who give advice aren’t committed to the mastery of their craft, then you wind up getting well-intended poor advice that does the same amount of damage as ill-intended advice.

The point: don’t always listen to people just because they’re nice and honest.  Those should be minimum standards.  And don’t buy stuff from people just because you like them.  Look for gravitas.  Look for wisdom.  Test for mastery and the boundaries of where that mastery stops.  Look for an advisor who invests in continuous learning and who plans on being better tomorrow than they are today.

Photo: Rachael McGraw, Santa Monica

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In defense of wealth (with a purpose)

Strip away questions of excess or greed and wealth can be the horsepower behind the accomplishment of great things.  Wealth doesn’t have to mean just what is owned by the 1% if we don’t want it to mean that.  Wealth can mean what each family strives for to fulfill their sense of responsibility to people they care about and to the community at large.

Wealth is what gives someone the ability to go to night school to earn their college degree.  Wealth is what provides the opportunity for children to play sports and music, go to school, go to summer camps, and go on vacation with their parents.  Wealth is the producer of jobs and career opportunities for other people so that they can create their own wealth. Wealth is what can be given away to help other people because of faith, community, passion, or personal experience.

Wealth for the sake of being wealthy does not seem noble or interesting to us.  But protecting and defending wealth that has a purpose for building families, for employing neighbors, and for giving away does.

Photo:  Rachael McGraw, Snoqualmie Pass

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The advantage to passion

I think a predictor of whether your financial life turns out well starts when you decide who you are going to listen to.  Assuming discipline in your behaviors, following someone’s advice is going to test eventually whether you were steered in the right direction.  So deciding who will help set the course before you begin is paramount to you getting where you want to go.

I believe in outsourcing intelligence to experts, which is why I use a CPA, a lawyer, a doctor, a real estate agent, etc.  There are life-management issues where reliance on experience, wisdom, and advocacy still primarily involves a personal relationship with someone dedicated to the perfection of their craft.

And it’s on this search for a trusted relationship that you won’t find a better test of fit than to examine how passionate someone is about what they do.  I want the guy I bought my car from to love cars.  I want the company I buy my table from to love woodworking. I want my business coach to love self-improvement.  And in business I want employees who love serving, insurance companies who love to impress, and clients who love getting things done right.

The average and mediocre is no fun, no better, and no cheaper, and will eventually lead to dissatisfaction.  Skip “kinda” and surround yourself with people who are all-in on what they can do for you.

Photo: Rachael McGraw. Siena, Italy

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Differences between insurance companies

Here is just a tiny sampling of important differences between competing insurance companies which have absolutely nothing to do with premiums, but they can affect you greatly.

  • The weight placed on your credit score as it relates to you qualifying for coverage, and the availability of coverages that you may want.
  • Your selection of a Revocable vs. Irrevocable Trust to hold real estate and whether you have/will be gifting percentages of Trust ownership.
  • Whether you get to choose the amount of coverage on your home or are limited to what the insurance company tells you to insure it for (which is nearly always wrong, in my opinion).
  • Whether your son/daughter who lives at home can be listed on your auto policy if they own their own car (run away as fast as you can if they say no, by the way).
  • Whether they have underwriters able to make decisions beyond what the computer tells them.
  • Whether they have a staff of Claims Adjusters experienced in general, and in your specific area of need, specifically.
  • Whether they can articulate their ideal client and why they are uniquely positioned to serve that target market better than their competitors (I’ve found only one insurance companies who answer this one!).

 

Photo: Rachael McGraw.  Mt. Stuart, WA

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Thanksgiving

If all we had going for us at our firm was a means to provide for our families, that would be reason enough to be thankful.  Thankful for our clients who treat us so well, thankful for friendly professionals who refer us to other families in need, and thankful for the opportunity to conduct entrepreneurial free enterprise to the best of our ability.  That’d be a fine prayer of thanksgiving.

But we are also thankful that we’ve evolved this firm to be a way of expressing and exercising our passion.  We get to continually learn, to share acquired knowledge and wisdom to improve someone else’s life, and to inspire others to make good financial decisions.  And in the service of others we get to unburden some of the load and risk of families trying to navigate a complex issue by themselves.  We realize not everyone finds a job that they’re passionate about, so we are grateful that we have.

So we are thankful for the business success, of course, but we’re more thankful that we get to do it in the manner in which we think we’re called.

Photo: Makenna Wall. Cle Elum, WA

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The Competitive Advantage of Fulfillment

This is one of my all-time favorite TED talks because it’s funny and because it posits an antidote to the cult of average, centered on the competitive advantage of having a positive belief system.  It’s work related because we believe there’s a business edge in being happy about the work that you do for others.  We enjoy being the relied-upon encourager of smart financial decisions, and our clients tell us that makes us unique and better.  I’ll take that every day.

The Happy Secret to Better Work – presented by Shawn Achor

Image result for shawn achor the cult of average

Photo: Rachael McGraw.  Flathead Lake, MT

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