Maximizing Clients’ After-Tax Returns
Our team leverages our insurance and actuarial expertise to provide you with custom solutions that minimize client tax-liabilities and increase their after-tax returns
Bond Portfolio Optimization
In order to reduce interest rate risk, financial advisors often allocate a large portion of the client’s bond portfolio to investment grade short-term bonds. The downside with this approach is that short-term bonds have extremely low yields—and are still subject to interest rate risk (albeit not as much as long-term bonds).
This is a difficult position for a financial advisor to be in. By choosing to allocate a client’s portfolio to short-term bonds for the sake of protection, the advisor is explicitly asking the client to give up higher yields for the sake of principal protection. Furthermore, if interest rates go up, the client’s bond portfolio will still absorb an immediate loss which needs to be explained to the client who thought they were accepting a lower yield for principal protection but ended up not being fully protected.
No-commission annuities afford clients the ability to get the majority of the higher yield from longer term investment grade bonds while being protected from interest rate risk. These investment grade bonds have the same credit quality as their shorter term counterparts. However, by investing in these bonds through an annuity, the client is protected from interest rate risk as the insurance company takes all of the interest rate risk.
In exchange for taking all of the interest rate risk, the insurance company gets a part of the higher yield of these long-term bonds while giving most of the yield back to the client. By utilizing these no-commission annuities in place of short-term bonds or long-term bonds, RIAs can provide their clients with either higher after-tax yields or reduced volatility. In some cases, RIAs can provide clients with both.
Selling a Client’s Life Insurance Policy for Cash
Helping seniors liquidate an investment in a life insurance policy. Many advisors think that the only way for a senior to exit a life insurance policy is for them to cancel the policy and take the cash surrender value. Most advisors don’t realize that some of these policies could be sold on the life settlement market for 3-4 times the cash surrender value.
We help RIAs sell these policies in the life settlement market without paying the typical life settlement broker commission of 15%-30% of the offer price. Often times we can transact these cases at 5% or less of the total offer price.
This leaves more of the proceeds for the policyowner.