Since Brian can say it much better than I can, I’m taking the easy way out by stitching together some of the real nuggets I discovered after speaking with him, and reading his book.
The wealthy may have bigger worries than mere taxes and scorn. As the growing income disparity continues to widen the divide between the so called “haves” and “have-nots,”, the wealthy now face a much higher risk of becoming the target of “citizen redistributionist”- those seeking their “fair share” through an accommodating justice system. Reading this makes me want to think about Ayan Rand’s last novel Atlas Shrugged, where the villains in the book were those who defied reason, only working on their feelings, resulting in achieving nothing. This approach neither serves the rich or the poor.
- In a society already deemed the most litigious in the world, the stakes for people with assets are increasing at an alarming rate; yet, many high net worth individuals remain dangerously unprepared. This is a result of a drastic underestimation of their liabilities and a lack of understanding of how to effectively use personal risk management strategies and insurance to protect themselves and their assets. Early on in my career I had the notion that the more zeros a person’s net worth had, the “smarter” they were.
After working with the superrich, I discovered that this was not the case. Often, their advisors are referred to by family members, or other professionals who want to bring in their own people.
I’m reminded of a business relationship I had with Doris Duke in the late 80’s. Ms. Duke was the heiress to the Reynolds Tobacco company. Doris was, the richest woman in the world at the time. Yet her semiliterate butler became a figure of scorn, suspicion and envy when it was revealed that Miss Duke had left him $5 million and made him a co-executor of her estate for $500,000 a year for life.* Where were her trustful advisors? Who was responsible for her financial plan? Now I admit, this is an extreme case. Still it is not unusual to discover that a family of wealth, can be badly taken care of exposing the family to massive financial risk.
3- Property, casualty and liability coverage is difficult for most people to understand at any level: but when you spend your life building wealth, and as a byproduct, adding multiple layers of liability, it can become overwhelmingly complex at the next level.
Again I relate my own investment experience with Brian’s view on P&C. There is a mindset for Investors who are accumulating wealth, to keep a similar asset management and financial advisor team in place as the portfolio exceeds $5-$50 million plus. This usually is a mistake, because the complexity of understanding all the various parts of a large portfolio requires specialized resources. Not every advisor is equipped to do sophisticated planning and is able to bring the right players to the table.
The same happens in the P&C space. As Brian likes to say, It “takes three to tango. I love this metaphor, because my wife and I dance the tango. See my Dancing Post on my blog.
Brian says it perfectly-
The tango that you (his clients) practice every day is a fantastic display of artistry, passion, and trust between two partners. The tango that I know and practice every day is a tango that involves three partners: You, as the insured, may feel the insurance dance is best performed one way, while the insurance company may wish to dance another way, and I, as your representative, step in as the third partner to orchestrate the dance between you as buyer and the company as insurer. My ultimate goal is to find the common trust of the other two partners: the insurance company, trust it has all the information needed to accurately underwrite and insure your personal exposures, and your trust that the insurance company will provide a generous insuring agreement and pay claims with little inconvenience to you.”
In the end it is about trust, likeability, and competence. I after reading Brian’s book, and reflection on our discussion, he has all three. This book is a must read for the affluent.