Robert

RIA at MM Advisors

Centralized investment team, individual advisors selling.

~25 advisors

3 billion in assets

He works with younger folks: content creators, people in professional gaming space.

All are fiduciaries.

He came from the investment side. Started in Shanghai doing economic research, but moved progressively into being a comprehensive financial planner.

Insurance: he tries to get the "Goldilox" amount, not too little and not too much. Part of it is education, helping people understand what they do and don't need.

He joined Miracle Mile 6 months ago. Prior: NY-based RIA for 3.5 years. Prior: Shanghai research.

Folks at Miracle Mile are occasionally able to run quotes, but we are consistently looking for better rates.

We don't use a lot of universal life right now. We separate insurance from investments, so that the product is not doing both at once.

*** Are you insurance licensed today?

No I am not. One person on the NY team is, but we are not trying to get commission from them.

*** Have you sold it in the last 6 months?

Yes, as a part of the planning process, I do include that. My philosophy on insurance is that it must serve some insurance-based need: estate planning, etc. I can think of 5 examples in the last 2 months.

*** Of those 5 examples, which kind were those?

For the younger folks that I work with (30s-40s), they are all basically starting with term. We want to make sure that all of these policies are convertible to whole life at one point.

In one case, we advised a client to keep a whole life policy that her parents had purchased for her, but that was an exception. We did not sell it.

In cases where we are selling it: it's to a high net worth individual who is doing estate planning and looking to shelter against some estate taxes.

*** What is the process of selling it like today?

I work with the NY team, and I know that they work with several carriers. I'm guessing Mass Mutual, Prudential, some others. I know they look at others, but they almost never use them (like NW Mutual).

If there are better options elsewhere, we have them connect with insurance agents to get it done.

*** What percentage of the time does life insurance come up?

Zero percent of them bring it up. I bring it up 100% of the time.

Four layers:

Optimize income

Optimize assets

Protect income

Protect assets

When I'm bringing it up, most of the time I say "Life insurance exists, you'll need it some day. You don't need it today."

I bring it up when they are looking at parenthood. They are worried about being a parent, but know little about a will, a trust, etc. We ask "What would it mean for your kids if you were to stop working prematurely, if you wanted them to be educated through age 21?"

Sometimes we will do a ladder of policies, a 10 year, 20 year, 30 year.

*** What is the net worth of your clients?

Typically I work with minimum $500,000 in assets. Most advisors at the firm work with $3 million in assets minimum. Many of my peers are working with 9-figure clients.

*** Do you have a tool for financial planning?

We primarily use eMoney for that. It has many scenario planning tools, estate plan analysis.

The "Decision Center" runs projections around a person's entire life, and runs probability scenarios around it. i.e. What would happen if one spouse passes? etc.

*** Do customers push back against insurance if you recommend it?

Yes and no. Most people really recognize that we are fiduciaries looking out for their best interest. They respect that and trust us. Those who push back are probably a bit more risk-seeking. They see insurance as a waste of cost for not as much value. That's pretty uncommon, especially when they have a family.

The only other pushback point is on the cost side of things. Say I'm showing someone 2 different term policies, and one is slightly more expensive -- but it's convertible to whole life in the future and has a better rating, etc. -- I might say "It's worth spending extra time on this" but they won't care. Again, that's pretty rare.

When we are implementing a policy, we start with arming the client with as much information as possible. We are telling them exactly how much they need, if they need any health checks etc. We are looking to arm the client with the information so that they can work directly with the person who is going to place the policy. We try to be exact with policy type. I don't usually include riders for my clients, but one of my colleagues who works with people in their 50s-60s uses a lot of long-term care riders.

*** Have there been instances where people have been unable to get coverage?

There have been instances where people get delayed significantly in underwriting. We usually have a good idea about what the outcome will be as we are recommending a policy to them.

*** When are you recommending permanent products?

For me, it's rare. For my colleagues who have higher net worth clients, it is serving their trust and estate planning services.

I rarely consider mixing insurance and investment goals through the same product.

*** What are some of the tax-efficient investment products that you recommend?

A lot of them are business owners where we do a lot with retirement accounts. Some specialized qualified options like solar credits. For high-net worth people we recommend charitable accounts.

*** What part of the insurance process would you want to be updated on?

Certainly we ask for any in-force illustrations before they sign. We want to know what the quote is, what all the details are. I can't think of anything else. Since it is being done internally, I kind of trust our team to cover most of those steps.

*** With the internal team, are there things you wish could be improved?

This is a general statement: I think the biggest area would be the client experience. If the client could go do research on a website that didn't then try to send them 900 emails and sell their information to a ton of affiliates, that would be great. They should not have to wait on us to provide them with information.

We are not insurance sales people, nor do I want to be. I would certainly like for my clients to be more educated, and have the ability to gain that education on their own.

*** How do you feel about a digital insurance desk: get access to quotes, a policy, send a link to your clients to check it out?

That would be great. The industry is antiquated and opaque. It's obviously highly regulated, but it is unnecessarily difficult in many ways, "What do these words even mean?" Most people have a visceral reaction to the word "insurance", but even when they begin the research it's like "Forget it, this is too confusing."

If I and working with someone over the course of years, it is not always easy to log into whatever system they need to use in order to update their policy.

*** Do you have access to the cash value in their accounts?

Sometimes. eMoney has a feature that allows you to link accounts. Some carriers will allow you do to that.

Some people just let a whole life policy grow, while others are more active with it -- taking out loans against it, etc.

We need to track their progress in order to maintain records on their net worth.

*** Have you done any 1035 exchanges?

Yes have have done those. Most of the clients who come to us with life insurance are in the medical field, and were mis-sold policies as a resident. They have crazy premiums that forced them to choose between that or paying back loans. In those cases we surrender the policy altogether.

*** For the advisor VUL product that we are launching next year: the use-case would be for customers who have maxed out traditional tax-efficient channels. $2MM assets, maybe $250-750k.

What do you recommend for that type of client?

Totally depends on the goals of the client. Most often the case is putting that into taxable accounts as opposed to other tax-deferred vehicles, for the flexibility that affords, including the ability to potentially make it more tax efficient later on.

Most often, if a person wants to buy a house, start a business, etc. I tell them that they are far better off putting into a taxable account.

*** How often are these 1035 exchanges happening?

For clients in the medical field who got preyed upon as residents, it was common. That happens all the time in the medical field. With others it is much less frequent.

Most clients have little to no insurance, maybe a little through their employer.

*** How often are you using your internal person versus outsourcing altogether?

Typically if our person is getting involved, she's going to encourage them to find other quotes as well.

*** What does the interaction between yourself and the internal person look like?

Typically just a first intro meeting with her, myself and the client. After that, the client updates us on the process as it proceeds.

----

We haven't talked about this but a lot of my clients have a really bug need for disability insurance. My clients really don't know anything about that, especially in the entertainer/influencer space.

*** Would AUM fees be an incentive for you to recommend a universal policy?

It is an incentive for advisors for whom that is already a part of the plan. Everyone here is a CFP, CFA or both. So disclosing conflict of interest is ridiculously important. Any time there is an incentive for the advisor to recommend one product over another, that has to be disclosed, and there has to be a really good reason for recommending the more profitable one.

If the AUM fee presents a conflict, that would potentially generally complexity -- "Will this violate my conflict of interest policy with my client?" Trust is hard to gain, and ridiculously easy to lose.