(continued from “Working with High Net Worth Clients – Part I)

What we have found to be extremely successful talking about is an alternative type of premium financing of life insurance. Traditional premium financing strategies have too many moving pieces of cooperation attached and not enough creative exit strategies which do not involve death. There are collateral demands, re-qualification demands and the possibility that if the client lives too long, it can become an expensive loan interest proposition. So it is imperative to address the breech in this philosophical approach to using other people’s money.

Today we are using premium financing strategies that synchronize the exit strategy with the lenders interest rates and the insurance policy performance. We have longer qualification periods for loans from international sources, interest rates well below traditional financing option rates and policies that completely eliminate the downside risk when building value. Whereby traditional financing methods use sales to defective trusts and grat engines to pay back principal and interest while encumbering the collateral, we now use the insurance policy as the majority collateral at inception and we collateralize 100 percent as the policy matures. Our exit strategy is funded from our collateral source and not from outside asset liquidation.

We have revolutionized premium financing and have taken it to the next logical level based on observing the buying behavior of our best clients. Without the cooperation of CPAs working with advanced planning insurance advisors, this type of best-in-class planning makes it to their desks very slowly. We are receiving data on CPA firms losing great clients to the competition because of the lack of planning knowledge connected to the firm. As more CPA firms enter the wealth management arena, they will need to decide their level of commitment to expanding client services. The logical point of cooperation between our professions create these combination creative methodologies which work extremely well for our clients. The CPA firms who will learn from strategic alliances will lead at integrating the new paradigm of wealth management with their core accounting model.