If there are gaps in your wealth plan that could expose you to unnecessary risks coming up here on enriching wealth, we are going to be discussing the Four Risk Management Solutions to stop exposing yourself to dangerous gaps.
Watch the full video here:
Transcript:
Welcome! You know we talk a lot about Enriching Wealth, well when we enrich wealth that means a lot of different things to a lot of different people and when we talk about risk management that really comes back down to all of the different ways that we can look at how to grow your wealth how to protect it correctly so that it’s there for you for the things you care about and for your loved ones in the future now that is the essence of what we want to be discussing today is that there’s going to be four ways that you can start risk managing your wealth better, so that you can avoid gaps in your plans and those gaps could be very detrimental to your wealth and that’s exactly what we want to avoid.
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The misconception is that insurance is a commodity.
So let’s dive in the first gap that many individuals have and families have when they try to risk manage their wealth is the fact that they look at risk management as a commodity you see there are different types of insurances that you can be using there are different types of ways we can be positioning your overall portfolios but using all the tools available to you are going to be a vitally important piece of the process and when we talk about not you know having it done correctly or using the wrong tools that’s going to provide unnecessary risk so when we talk about the insurances first and foremost here that’s a big piece of the puzzle because there are many different carriers out there that you can provide the seemingly same insurance and we’ve been conditioned more and more to go for the lowest cost provider because that insurance is going to be the cheapest and is going to be just as good as another type of insurance that’s out there or another carrier’s insurance that’s out there well that may or may not be the truth and so when we take a look at what’s right for you what’s right for your family.
We have to take a look at the fact that there are many different carriers but the things they provide are all going to be slightly different so when you are just starting out in life yes having just a basic car auto insurance policy may be very helpful but that same company that you had the auto policy from and the renter’s insurance from may be completely different than when you have two cars you have a house and you may have a couple other little items that you need to be just kind of protecting in that manner well that’s going to be completely different than from when you have two or three houses you have a couple different boats you have maybe four or five cars and to the fact that now you’re having to protect the kids and all the aspects of what they’re doing that’s going to be completely different types of policies that are going to be needed different ways of coverage to make sure that you are taken care of and the other thing that happens that may happen today that did not happen when you are younger you may be exposed to lawsuits, so the insurances protect more and more of that coverage and having the umbrella policies in place having all of the different types of auto policies that are going to be correct for you for your family and the types of cars you have for the toys that you have the boats your maybe even your own fractional share in an airplane well all that coverage comes back to being vitally important.
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Using a broker as a conduit to a commodity versus giving them a “seat at the table” with their most important advisors.
When we talk about how to correctly risk manage your wealth so making sure you have the correct policies now one way to do that leads us to our second point that we can be taking a look at all of the different ways that we can be using a broker to come in and look at all the different policies you have and make sure that they are going to be correct for you there is only one problem with using a broker you see when we take a look at risk management here yes brokers can go and say let’s take a look at all these different carriers let’s take a look at all the different options that are out there with respect to whether it’s the insurances or whether it’s the physical brokers for your wealth all of that is good but the one hardship that happens there is that you start getting siloed of all the different types of advisors that you have and when one advisor is not speaking to the other advisor especially when it comes to how to risk manage your wealth.
We may be doing something on a risk management for an insurance basis that may be completely out of line that for what we want to do on risk managing your taxes or vice versa maybe we are doing something that is going to protect your portfolios but that’s going to expose you to unnecessary lawsuits and so making sure that when we take a look at your different types of insurance or different types of risks and the gaps that exist we want to make sure that we are not siloing your advisors that the advisors that you have are communicating are talking together and are making the plans for you together cumulatively so that way we know that the gaps are covered both on.
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Not leveraging their entire family’s portfolio to obtain the best terms and conditions in the marketplace.
Let’s say an insurance basis but also on a tax basis also on a protective basis for your portfolio and that you know you have the best wealth plan and strategies to minimize the gaps that exist all right our third aspect then comes back to the fact that there are going to be many times that you don’t leverage all of the different types of wealth that you have and ways that you can be using them together to get you some better opportunities.
Now, let’s take a look at insurances specifically for this because when we talk about insurance that’s the one way that you can really start to protect yourself better so again when we talk about the fact that you don’t want to piecemeal your advisors together and silo them and keep them separated we don’t want to do that with your insurances either so what that comes back down to then is the fact that when you take a look at your auto policies we don’t want that to be completely different than your umbrella policy because of the fact that when we take a look at the umbrella policy that’s going to pay out after a certain opportunity that comes with your auto policy.
So the auto policies paid out first the umbrella policies pay out second and if we are having them from two different carriers, if we’re not looking at where the gaps exist then it could be that you are exposing yourself to unneeded risk so your auto policies may pay up to a certain amount of money but that umbrella policy may actually not pay out if the auto policy was not in the correct terms that would work with the umbrella policy.
So the fact that you have an umbrella policy may actually be just fine it may actually be something that you were excited about that was supposed to be that protection but it did not end up being the protection that you wanted just solely on the fact that it never paid out there was a gap that existed in the original auto policy that kind of voided your umbrella policy so if you have an additional five million dollars of umbrella coverage or 10 million dollars of umbrella coverage that may have been the correct amount for you but if it does not pay out for a technicality then it’s just and so making sure that your policies work together is going to be another vital piece of making sure that you can manage the gaps that exist, so when we take a look at all this together we know that making sure that we have the correct policies that we don’t treat it like a commodity.
We treat it as was supposed to be how to risk manage your wealth and yes we can find ones that are going to be cheaper than others and we should we should find cheaper alternatives but we don’t want to take cheap alternatives and turn them into something that actually was not meant to protect where you’re at today it may have been something that you’ve had the same level of coverage or you may have had the same carrier for many years and looking back at what you have is going to be vitally important to making sure that you can prepare for what’s to come for the future not siloing your advisors is going to be a piece of that making sure we have the correct insurances in the correct places and they all play nice together so whether that all comes from one carrier or whether we take a look at making sure that when we send out for quotes.
When we send out for information from all these carriers that they work together in the manners they’re supposed to that is what’s going to help the most to make sure that we can fulfill and fill all the gaps that exist all right so we’ve talked about these other aspects.
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Gaps. Pure gaps in coverage as an outgrowth of all of the above.
Now I want to dive into our last one here the fourth aspect of helping to risk manage your personal wealth against any dangerous gaps that exist well I’ve alluded to it many times here in this in our time today and that is just outgrowing your you see like I talked about earlier on the same carrier many individuals have from the time that they were in college through the time they may be having their first children through all through their mid careers and things have changed for you I completely understand that that’s why we need to continually keep looking at those gaps that exist and the risks that are associated with them.
So when we talk about the advisors that you have strategically in your life that are speaking into your financial well-being well making sure that that is an aspect of looking at the overall risk it’s going to be a vital piece of that so what I mean here when we talk about taxes there’s some very good risk management solutions for your taxes, how can we lower taxes today tomorrow, and in the future well.
What that looks like then is making sure that we have the correct buckets of wealth so that we can have the growth that you want with your wealth but making sure that we can be pulling back on the taxes that would be owed on that growth.
Well, some of that comes to the insurance side so how can we say let’s put some money aside in the insurances that are going to help cover any potential tax bills or put some money aside in the insurances that may actually be paying out tax-free when we want to use them in the future so this could be done for something say like long-term care see long-term care can be quite expensive and it’s something that you probably don’t want to be paying for yourself if you don’t have to if we can push that risk off in a correct manner in a cheap manner to cover that risk then it may be money well spent in that manner but if we’re taking from accounts that would be deemed taxable today in order to make that happen you may be setting yourself up for unnecessary risk of a tax benefit or a tax amount so that’s where it comes into having all the different details taken care of there, well, you can help grow your policies by the fact that you forget coverage as well so yes it’s one thing.
When you buy a new automobile to have you know to call up your insurance carriers and tell them that you got a new car yes or new boat yes but what if we did some modifications to your car or what if we changed a couple aspects to the boat we don’t remember to do that offhand to call up and say we need to have it revalued or one of the biggest aspects is we add on saying addition to the house or make changes in that manner those all could leave unnecessary risk in place so as we’re going about putting new additions on renovations making changes to the wealth that you have whether it’s a house and a personal property or whether we have made changes to the portfolio that is going to increase the likelihood of it to grow in the future.
All of that comes back to making sure that you have not outgrown your risk management, so that’s why that’s the last aspect here because we take a look at all the different levels of risk the gaps that exist chances are you have outgrown an aspect of your risk management for your wealth.
I encourage you to take a look at that I encourage you to go back and revisit those different aspects of your wealth to make sure that you have no gaps that exist that you don’t have unnecessary exposure to something that could be deemed dangerous for your wealth.
Now as you have many questions feel free to reach out we’d be happy to look at things and give you a second opinion on the things that you’re doing and the ways that you’re risk managing your wealth, but with that we have many opportunities here for you to learn more about how to risk manage about different aspects of the economy but ways that you can be positioning yourself, your family, better to create an impact for not only what you want to do but also for the community that you live in with that check out our other areas here are other videos blog posts and we’re going to be making sure that we see you soon. Take care!
The commentary presented herein contains the opinions of Lions Wealth Management, Inc., a State of Minnesota Registered Investment Advisor. This information should not be relied upon for tax purposes and is based upon sources believed to be reliable. No guarantee is made to the completeness or accuracy of this information. Lions Wealth Management, Inc. shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions contained herein or their use, which do not constitute investment advice, are provided as of the date written, are provided solely for informational purposes, and therefore are not an offer to buy or sell a security. Investments in securities are subject to investment risk, including possible loss of principal. Prices of securities may fluctuate from time to time and may even become valueless. This information has not been tailored to suit any individual.