Financial Advisors

Most projections say that the number of Americans who are 65 or older will rise by over 10,000 per day, on average, until the year 2030. That is the year when the American senior population will have doubled to 71 million from today – every fifth American will be 65 or older. These people will need the expertise of competent, able financial advisors to help them manage their finances and fund their retirement and the healthcare they will need. With the growth of this demographic, the secondary market for life insurance policies will also grow and become more relevant. For many seniors, it will be a viable way of financing their retirement or funding their healthcare needs.

Retirement income, ensuring a certain lifestyle, and paying for long-term care are all needs and challenges that cause seniors to seek out alternative funding. Seniors and financial advisors alike are learning more about the secondary market for life insurance policies, how that market is regulated and what protections it grants, and ultimately – embracing life settlements as a source of alternative funding.

Will you, as a financial advisor, be part of this growing market?

You Have a Responsibility to Acquaint Your Clients with their financial options

It’s the job and duty of a financial advisor to acquaint themselves with the financial choices available to their clients and inform those clients of their options. You help them manage, keep, and ideally grow their estate. When an appropriate solution presents itself, you should make your clients aware of it. Regardless of your fiduciary relationship with your clients, it is important to approach each client’s assets as if they were your own. How would it have impacted your estate if you surrendered your life insurance policy to the insurance company, only to find out that you could have sold it for 8 times the cash surrender value? That is the amount that a 2009 Senate Special Committee on Aging found the average life settlement was sold for.

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As a financial advisor it is vital that you do not find yourself, whether through lack of due diligence, or conscious choice - failing to inform your clients of their life settlement options. This could undermine their confidence in your ability to provide them with comprehensive advice in the future, and further could affect your reputation not just with your clients, but in the business community.

These are the steps to take to ensure that you’re acting in your client’s best interests in regards to a possible life settlement:

• Evaluate your client’s overall financial situation to determine if a life settlement could be a beneficial option. Review their particular policy details to identify the type and costs of the policy.

• Determine the probability of your client receiving an offer for their life insurance policy that would be better than the cash surrender value offered by the insurance company.

• If you decide that a life settlement would be beneficial, carefully research nationally licensed brokerage firms such as ALIR and choose one that has a good reputation and established relationships with institutional funding sources.

• Help your client get the best offer they can for their policy. Work with ALIR to insure a seamless transfer of ownership and funding process.

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