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Guest Blog by Ken Buckley

Note from Bob Ritter:  Recognized as one of the top producers in the premium financing business, Ken Buckley’s insurance agency (The Buckley Group) is unique in that all they do is premium financing.  That said, The Buckley Group is not a premium financing company or lender or wholesaler.  Instead, like you, they are in the business of working directly with high net worth clients to help them determine if premium financing is a suitable option in the context of the client’s overall financial and estate plan. I am really pleased to have Ken share with you his knowledge in this exciting and resurgent premium financing market.

If you are selling premium financing on a part-time basis, we have observed that it’s pretty difficult to get good consistent results.  In our discussions with dozens of life insurance producers, we have found the most common complaints are that these cases take a really long time to process, they take a large investment of time and capital, and they rarely close (often with clients getting “cold feet” at the 11th hour).  All of these characterizations about the premium finance market are dead-on accurate . . . unless you have the experience, protocols, dedication of time and historical client base necessary to engage this market in a more efficient and profitable way.

What follows below are some of the things that we do at The Buckley Group that have helped us become one of the highest grossing agencies in the premium finance market.

• First, not all high net worth clients are good candidates for premium financing.  The biggest mistake that we see being made in the marketplace is the failure of producers to efficiently pre-qualify the prospect.  We work with some of the largest life insurance producers in the U.S. (along with advisors in other disciplines) and the first thing that we do with a new prospect is have them fill out our customized financial and medical profiles.  From these questionnaires we can glean whether the client is a potential prospect from a purely numbers perspective.

• Next, we have to determine if they’re a prospect in terms of risk tolerance profile and estate goals.  In order to do that, we set up a GoToMeeting where we map out all of the reasons anyone might not be comfortable with the premium finance concept.  Typically, during that first meeting, we can assess whether it is a case that will close, or if premium financing is not suited to that client.

• Second, liquidity is just as important as total net worth.  One of the biggest factors in determining suitability for premium financing is the client’s liquidity.  Since we know that it’s possible that the plan could underperform our initial projections (if, for example, the Index yield is lower than projected), we make the client fully aware of the potential increase to the client’s interest costs and collateral requirements in the future.  We spend a substantial amount of time in the early stages of discussions with a new client to ensure that he or she has the financial liquidity and emotional mindset to absorb those increased liabilities should they come to pass.

• Third, the “advisor profile” is just as important as the client profile.  The advisor profile is our assessment of each client’s various advisors and how they are likely to influence the client as they explore our premium financing program.  Getting all of a client’s trusted advisors onboard, from CPAs to attorneys, is vital in closing a premium financing case.  It is important to identify a client’s advisors at the beginning of the process and loop them into the discussion.  If they are not included in the discussion until the program is further along, many advisors will feel threatened by the unknown.  Over time we have found that advisors who challenge our concepts the most aggressively, are often the best allies and future referral sources.  By having answers to their toughest questions, and constructing solutions genuinely designed to protect the client, we turn potential adversaries into colleagues.

• Fourth, high net worth clients (and their advisors) want open and honest referrals.  In the 20 years that we have focused exclusively on premium financing, we have compiled a large list of enthusiastic and supportive customers.  Because their premium financing program has been an effective solution, many of these clients are willing to share their experiences with my new prospects.  Being able to have an open conversation with current clients helps to assuage any concerns about our overall credibility or competence.  We also have a number of well-respected CPA firms and law firms that are available to our client’s advisors (as we find that about 25% of the time, third party professional firm references are requested).

• Fifth, case design, bank options and annual reviews are complex moving parts that require detailed customization.  Seamlessly integrating a client’s premium financing program into their estate plan, and making sure each part of it works to achieve their ultimate legacy goals, is a complex process that is only perfected through experience.  We frequently get opportunities to work with other producers that have clients who purchased premium financed policies that were designed incorrectly, or as a result of poor annual reviews and follow up, have fallen away from their original goals.  Often, we can drastically reduce the client’s current and future liability and get an estate plan back on track.

Today, there are approximately 900,000 Americans with a net worth of more than $3 million and only a tiny fraction have used premium financing as part of their overall financial and estate plan.  So, while there is no shortage of prospects for this incredible market, the premium financing solution is complicated and requires a special team to succeed.

If you have never done premium financing, or tried it unsuccessfully, or are experienced with it, we have some valuable information for you.

Schedule a Phone Conference

Bob Ritter has asked me to elaborate on some of the cases we’ve worked on over the last three years.  If you would like to know how we work in partnership with other advisers, simply click here to get more information.  During our initial conversations, we can discuss more details on the following:

• How we can work with your existing IMO as we develop cases together;
• How some producers are making over $1 million per year on premium financing cases (with almost no time, effort or capital invested);
• Why the death benefit amount proposed is often way too low (and how to prove the need is two to three times greater than initially contemplated);
• How to stop wasting time and money chasing the wrong premium finance deals;
• Learn the biggest case design mistakes made by producers in the premium financing market;
• Why larger deals are actually easier to sell;
• Real life case studies on premium financing sales that we’ve made over the past 36 months including some with target premiums over $3 million.

I look forward to exploring more about how we might work together.

Kenneth J. Buckley started The Buckley Group 34 years ago when he realized that being an independent insurance broker was the only way to effectively service his clients and be sure that he was providing them with the best of options.  Since then Ken has diligently researched an array of financial products and associated with the most respected CPAs and attorneys.  A member of MDRT’s Top of the Table, Ken has access to the most exclusive products available and the leverage to work with insurance companies to offer customized programs.

 

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