Log in to access resources reserved for MDRT members.
  • Learn
  • >
  • Evolving for the long term
Evolving for the long term
Evolving for the long term

Jan 03 2023 / Round the Table Magazine

Evolving for the long term

Case study about how client service called for holistic financial and insurance planning over the long term.

Topics Covered

One of my first clients when I started as an advisor was what we in South Africa refer to as the middle-to-high-income market. He and his brother were in a growing and successful family logistics business, but he had done very little financial planning of any kind apart from buying risk insurance from a broker. He was 34 years old with a community property business, a wife and three minor children. However, the marriage, as well as the family’s cash flow position, was strained as he struggled with addiction and was already having health issues at his young age. 

With all its complexities, this case would throw me into the deep end so early in my career, but it was no doubt an opportunity to learn quickly and effectively with great support fortunately at my disposal. One of the main reasons I joined MDRT and attended as many meetings as I could was to learn from the best in the world while treating clients fairly and operating with a strong code of conduct and ethics.

I opened a can of worms as I started analyzing the client’s portfolio. I had to contend with a perfect storm of potential cash flow concerns approaching, thanks to company assets being financed by increasingly taking on debt and heavy personal spending driven by the desire to build status, which is of great importance in our Indian community.

It soon became clear that this would not be a normal case, but would require a financial needs analysis, business needs analysis, estate planning, trust planning, investment planning, protection (risk) planning and tax planning, which all should be combined into a full holistic financial life plan to ensure wealth creation and protection over the long term for the immediate family. Compounding the difficulties were the marital problems and the legal and emotional support that needed to be poured into this family. 

I had to use many unique approaches to ensure we maintained a workable plan with a lot of safeguarding on wealth and dependent protection as the health and marriage of my client deteriorated while the business became stronger and larger. 

It was very clear to me that risk protection was going to be an integral and urgent part of any solution to start followed by longer-term estate and trust planning. The client already had two small risk policies in place, so I made it my duty to check for material disclosure, especially regarding medical concerns and the possibility that claims could be declined by the carriers. I found that the coverage was insufficient and not comprehensive enough, so it was critical to get new coverage underwritten before replacing those policies. 

This story about the holistic approach that evolved and my relationship with this family spans 14 years. So many times during that period, I had to save lapsing polices from cash flow problems. The portfolio I helped my client build also included key person life insurance policies for the business, buy-and-sell partnership policies with buy-and-sell agreements for business and estate protection, education plans for the children, short-term investment builders to generate liquidity, a family trust to protect against possible future divorce settlements, and a last will and testament to protect the estate and legacy.

The coverages eventually paid out 15 million South African Rand through a combination of cancer coverage under the benefits for critical illness and dread disease benefit, occupational disability and impairment coverage and, finally, terminal illness, funeral and life coverage. It was incredible and emotional for me to be able to stand next to my client’s bed after he was declared terminally ill a couple of months before, look him in the eyes, hold his hand and tell him that he does not have to worry about his family. We had already taken care of most of the estate planning with our successful terminal illness claim and previous claims. I assured him his family will have no financial hardship and that I would take care of the business matters with his brother going forward. It brought tears to both our eyes and lumps in our throats. 

This case required providing extensive service levels to the family, and I quickly built up a reputation and personal brand as the go-to person within their large network of families, friends and colleagues who also fell perfectly into my target market of middle-to-high-income individuals with private equity and influence in their communities.

These situations, and cases like it, demand continuous professional development. There are simply no shortcuts and no quick wins. Become a professional as soon as possible by building a personal brand, presence, credentials, affiliations and qualifications to ensure a great value proposition at all times.