The typical approach to managing risk in a family is one best described as Respond & Recover. The whole insurance industry is predicated on the value of this approach as it supplies products and professionals dedicated to putting families back on track after a loss event. And this paradigm is ingrained into the expectations of consumers and their advisors to the point where insurance is seen as THE risk management option available.

But a complementary approach to managing risk in a family should be one that I’ll describe as Predict & Prevent. There should be an overwhelming push to build an ecosystem of products and professionals dedicated to stopping the bad day from happening in the first place.

Fortunately, I believe a wave of change is coming in that direction so that the new paradigm for managing risk in a family will incorporate both. Markets love efficiency and not losing is more efficient than recovering from a loss. Technology and sensitivities to Big Data that drive the arbitrage within the insurance industry can be flipped to the prevention market where there’s profit from behavioral change. And if presented an alternative, consumers will prepare an answer to the question, “how much would you spend to not spend money on insurance?”.

Practically speaking, this movement should come from the insurance industry where the experience and proclivity to be concerned with family risk lends itself best to adding a Predict & Prevent mindset. Very little investment would be needed if those in the insurance business shared this vision and expanded where they need to go. But economic vacuums will be filled by someone else if the sacred cows of “the way things are” aren’t dealt with.

A car company changed the energy market, an information company changed brick & mortar shopping, a consumer electronics company changed the music industry, and a philosopher(s) might be changing centralized finance as we speak. None of these disruptions spelled the end of the original market, but the biggest winners were the outsiders who didn’t invent the mechanisms of their movement, but merely applied them to the vision that “this is better than that“. I bet the original insiders in those markets wish now that they’d been their own disruptors. And as I predict that someone will be successful selling the vision that prevention is better than reaction, we’ll see who that someone will be.

Non-Transactional Mindset

Transactional relationships are potentially ruinous because they hide what you aren’t getting behind stuff that doesn’t matter. The game becomes winning the transactional experience, not providing something meaningful. The worst: you pay us less to give you something you think you have to have. Second worst: I want good customer service. The reason these are wrong is because if I can convince you of these two, you may not think to realize that you’re buying garbage.

Proof? There are two insurance commercials on TV today that promise low premiums while using examples of scenarios not even covered by the policies they sell. That’s unbelievable to me. And one of the highest rated insurance companies out there has some of the biggest gaps in coverage.

I think the overarching lie is that defending your family against potential financial calamity can be solved by making a purchase. No. Defending your family starts with a list of thoughtful questions, not your checkbook. Defending your family depends on a plan that you’re involved in making, not something that comes off the shelf and handed to you. Defending your family depends on wisdom gained, not by falling for superficial gimmicks.

I think insurance is important and I’m not critical of the product. But there needs to be someone championing the truth that buying insurance is incomplete. It doesn’t prevent the bad day, it doesn’t answer when it’s better to NOT buy insurance, it doesn’t offer anything until you have the bad day, and it’s limited in the scope of help it can provide. The insurance transaction is just playing a role, not telling the whole story. So look instead for either a more complete relationship from your insurance expert than just a transaction, or find a complementary relationship that can do more than the product can.

Favorite Questions

What events could move my financial plan out of alignment? What are the probabilities of those events happening? Can my behaviors or circumstances influence those probabilities?

What are the smallest possible changes I can make that’ll have the greatest impact on my exposure to risk? What’s the largest possible return on the smallest possible investment?

How resilient is my financial plan to loss? How much financial horsepower do I have at my disposal for recovery? How can I influence the parts of my financial plan that will need to be sacrificed?

How can I use the confidence gained in answering these questions to better align myself with my current and future plans? How does taking action in this area serve as an accountability partner to how I say I want to live?

Agency of the Future

We aren’t counter to the digital future, but our passion is committing to the deeper personal connection put more at risk because of it.  As technology completes more of the tasks needed for a working relationship, we’re devoted to the emotional relief of worries and stresses that families face in their scarce-resource decisions. 

No family we know would say that technology has made our industry more easily understood, less complicated, or less volatile.  No family we know would say that they expect insurance of the future to be more personal.   No family we know would say that technology is making our industry more aligned with their family needs.  Innovations that make it easier to transact or communicate is not the same thing as making things more valuable. 

And what our clients report as most valuable is their ability to lean on someone with a deep expertise and a genuine interest in what matters to them so that their decisions and following behaviors are allocated accordingly.  Do we invest in technology?  Sure, but we see it as a price of admission to be worthy of being in this business, not something around which to build an overarching strategy. 

We believe the agency of the future will decide to go in one of two directions – either an accumulator of transactional relationships, or a thought leader.  And we’ve chosen to be the latter, filling the space to show that the emotional benefits of taking steps to protect the family outperforms the best insurance transaction experience. 

We sell and service our share of transactional relationships, but our future hinges on the relatability of a wider offer of defense-mindedness that permeates financial plans, safety concerns, raising children, and the pursuit of living as one is called to live.  Because addressing worries liberates one to pursue things that are good.  And we’re good at the day that ends with clients saying, “Wow, we never knew that. This feels so much better.”

We fully expect to diverge more from our peers in the future.  We intentionally slow down the decision-making process, we intentionally step away from selling policies if it’s not the best fit, and we invest heavily in our professional gravitas.  So we think we’re the agency of the future because we have no desire to look like any sea change or like anyone else. 

Barriers = Bad

There are two reasons to address risk. The first is to lose less, the second is to live more. The mission for both is the same – to remove barriers that are standing in the way of living the life to which you’re called. There’s nothing noble about losing less if you keep living a small life.

So there should be an envisioned result from any input you make.

  • If you could remove the one thing you worry about most, how would your life be different?
  • What would you do with your energy if it weren’t devoted to that worry?
  • How would you spend your time and money differently?
  • Who would notice a difference in you?

Answer those first and then build a plan to move it toward reality.

Best Day

The first thing that popped into my head this morning was the realization that I own more TVs than there are number of times per week that I reach out to my closest friends. Which made me think about how much effort I apply toward holding onto and protecting things and opportunities I think are good for my family, yet which one of us wouldn’t place a higher value on our time and relationships?

The consequence of unchecked rugged individualism is relational poverty and tribalism. It seems we’ve been infected with an acute illness of “us” vs. “them” on pretty much every subject, and forced isolation because of the pandemic and distrust in pretty much everything about everything doesn’t help to build community, obviously.

And yet…our youngest daughter got married this weekend and I received a heavy dose of overwhelming contentment seeing how much everyone there enjoyed each other. Two families, multiple groups of friends, all there showing love to the others. So I don’t know how to address the big issues, but maybe addressing my own weekly behaviors to be more affirming, more outgoing, and a more intentional listener will at least make me and my own tiny corner of the world a bit more tolerable.

And it relates to my profession because as I work with families to do exactly what I reflected on (protecting things and opportunities that are good for their families), I’ll fight for nobility believing that doing those things well will liberate someone from worry so they can use their excess to find happiness in the connections with other people.

30th Work Anniversary

The only thing I’ve ever done in my career is concern myself with the defense of families’ financial wellbeing. I’ve given counsel and helped families plan contingencies for occurrences that might interrupt their financial plan. And I’ve been there as a financial first responder when a really bad day happens.

So in my 60,000+ hours of doing just one thing, I’ll share some earned observations:

  • Optimism bias is alive & well. My biggest competitor is apathy & the belief that bad stuff happens to other people. No one I’ve known has ever said after a loss, “yup, I saw that coming”.
  • There is an overemphasis on insurance and not enough on risk management. Insurance is a product that does nothing for you until after something bad happens. Risk management considers making the bad day not happen or result in less of an impact if it does. Most families and most wealth advisors think good insurance is good enough. It’s not.
  • I’ve never once heard after a claim, “that was a good experience.” Investment in prevention is worth way more than the best possible post-loss response.
  • Core competency and an interest in addressing risk in the body of a fiduciary engagement (within both in the wealth mgmt and the insurance industries) has diminished.
  • People place too much importance on frequency and not enough on severity. We’re drawn to worry about the more common things, and we should instead be drawn to the things that could be most ruinous.
  • Families love to learn. The best decisions are made when the full story is told and my best days are when someone says, “Wow, I never knew that. That helps us a ton.”
  • Risks are evolving. Trends in losses due to weather, wildfires, cybercrime, reputational attacks, professional liability, libel/slander/defamation mean yesterday’s approaches to wealth defense are outdated.
  • More frameworks for addressing the process of risk management are needed. Ad hoc (at best) approaches are outdated. Analytics and formal frameworks based on your specific behaviors will be the future.
  • It matters who you listen to. From whom you take advice today magnifies the result of tomorrow.
  • There’s a tremendous opportunity for wealth managers and insurance advisors to reinforce the emotional benefits of making investments in behaviors and plans that defend a family’s financial wellbeing. Perhaps that’ll be something for me to tackle over the next 60,000 hours.

Chasing The Joy

My mid-year resolution is to relentlessly pursue the joy I used to find in my profession. It’s my fault that it feels more rare to have a good day at the office and I hope that declaring my intent creates accountability for my own behaviors.

I’m going to pay more attention to conversations and less on the accomplishment of tasks. I’m going to commit more to affirming progress and less on spectating uncontrollable circumstances. I’m going to listen more to family perspectives and less to insurance company banality. I’m going to lend support to can-do attitudes and less to “everything sucks”. I’m going to share more of what I know about my subject and care less about those who aren’t interested. I’m going to focus results on metrics I care about and be distracted less by the desires of outsiders.

I have the best days when I’m in someone’s home learning about what they care about and then giving away anything I’ve learned so they can make decisions and change behaviors to improve their wellbeing. I’ve allowed people and establishments that don’t at all care about those same things to capture more of my attention than they deserve.

no one achieves alone

We know the name Edmund Hillary as being among the first people ever to summit Mt. Everest in May 1953.  Do you know who was standing next to him on that day and in that place?  It was 39-year-old Nepalese Sherpa Tenzing Norgay.  An extraordinary accomplishment to be sure but, as it turns out, it almost didn’t happen for either of them.  Two months before that famous climb Hillary fell into a deep crevasse and was only saved from near-certain death by Norgay’s quick-thinking and fast-action of tying-off a rope to a climbing axe, stopping Hillary’s fall.

No one achieves success alone.  Neither man had ever been to the top of Everest before – no one had.  It’s impossible for anyone to do it by themselves and no way would Hillary ever have become Sir Edmund had it not been for the strength, courage and expertise of Norgay.

Whether the goal is to stand on top of the world or achieve a certain level of personal success there will always be a need for a guide.  Step here and not there – do this and not that – listen, think, then act.  Sometimes the greatest help along the path is to ease one’s burden, not necessarily all the way, but just enough to make navigating a little easier, safer and less worrisome.  

Anxiety is one of the heaviest burdens a person can carry.  Anxiety is distinguished from fear because the latter arises in response to a clear and actual danger whereas anxiety is a subjective, internal emotional conflict or concern for an uncertain future.  Will I have saved enough for my retirement?  What will happen if my elderly parents need care?  If one of my children is involved in an auto accident, how will I know and what will I do?  What if my underlying health condition worsens?  If I do or say the wrong thing while serving on the homeowner’s association, can I be held personally liable?  These are only a very few of the thousands of “what if” questions that float through people’s mind and typically create anxiety and stress.  That anxiety, that stress, that worry is a hindrance to living happily, easily, more fully.

Those questions, and many like them, are good questions to ask.  The problem isn’t in the wondering – it’s in the burden, the anxiety caused by not having the answers, of not having a plan.  Imagine a mountain climber coming to a juncture along the way to the top.  Go left and you’ll follow a well-traveled but longer path.  Heading right seems more direct but there’s fewer safe areas and a questionable ice field to cross.  Straight forward looks tough, and no one has done it in many years, but it’s an idea.  Stopping here and turning back is always an option.  So, what does one do?  This is yet another moment when the Sherpa is an invaluable resource.  Their wisdom, experience, advice and perspective will help the right decision to become obvious and could very well save the climber’s life, just as Norgay did for Hillary.

Anxiety can be overwhelming; I’ve seen it in others and am empathetic to those crippled by it.  The anxious burden of an uncertain future can be eased by a guide, a Sherpa, who’s walked the path themselves, who’s seen the path walked by others, and has the insight, wisdom and credibility to help lighten the load and point the way.  Offering advice, relaxing one’s anxiety and enabling them to walk easier and more confidently shouldn’t be conditional on buying products or upgrading services.  Norgay didn’t stop two-thirds up the mountain and present Hillary with a pay wall that needed to be satisfied before proceeding on.  Tenzing didn’t have a product to be sold to further enrich himself through a commission.

A guide is to be paid fairly for their experience and expertise, for their ability to help others successfully navigate the uncertainty ahead, avoiding the crevasses that create anxiety.  The greatest reward for the guide however isn’t in the collecting of a fee, it’s in the satisfaction of knowing they’ve helped someone achieve their dream.  The smile upon Norgay’s face in the famous photos from 1953 wasn’t simply from him standing atop Everest; it was from helping Hillary achieve his goal, from easing another man’s burden and showing him the way.  It’s from the knowledge that no one achieves success alone.      

Contributed by Dan Cuccia

To Jim;

My beloved father-in-law passed away last week. 20 years ago I left the “security” of Fortune 500 ladder climbing with ambition to start my own investment advisory firm. My father-in-law asked a lot about my plans at the time and I’ll always remember a particular bit of his wisdom: “The most critical skill of any entrepreneur is the ability to get people to talk to you.”

At the time I believed him to mean that selling yourself and accumulating client relationships depended on securing someone’s attention for the benefit of the “pitch”. But now 20 years in, I understand the much deeper truth that the hinge around which real value swings is the extent to which you can foster meaningful conversations about things that other people value most. My own parents have this skill and delight in the thoughts of other people, and my father-in-law was the master of skillfully curious conversation.

So it’s no wonder I’m attracted to purposeful dialogue. At different times over the last 20 years I’ve had a foot in either the risk or investment management professions and I don’t particularly find them any different from each other. No matter the subject, intimacy comes on the other side of vulnerability and being a good developer and steward of vulnerability is a skill more than a proclivity. And it’s a skill at which I’m committed to constantly work. I’ve found greater success and greater satisfaction pursuing client feedback like, “I’m so glad we talked about that”, and “I’m happy you’re in our lives” than counting the number of clients I have.

So in tribute to my father-in-law, I’ll say thank you for the truth, and you were right.