Korhorn says he knows no other advisors who are P&C licensed. "Most
other advisors say, 'Hey, if I'm not getting paid for it, it's not
going to make it onto the agenda.' What we do is explain to
clients what insurance they have and how it works, we review the
details of their homeowners coverages, and we recommend changes, if
necessary. But they don't need to buy new insurance from us if they
don't want to."
Not all advisors will want to follow in Korhorn's
footsteps, but many-particularly fee-only planners-have sought
consulting licenses from states that require those licenses of all
non-agent advisors wishing to advise clients on their life and health
or property/casualty insurance. Says Brett Coffman, M.B.A., CFP, EA,
who practices in Charlotte, N.C., "I maintain state insurance licenses
for P&C as well as life and health, so clients can have a
heightened comfort level with our analysis of their insurance needs."
Coffman's process is one from which most non-agent
advisors could benefit. "We are looking at the client's entire
situation in the context of asset protection. First, we talk to the
client's insurance agent to ensure that the best comprehensive P&C
insurance has been obtained and all appropriate discounts applied.
Second, we discuss features we want to see on the client's LTC
coverage, if applicable. Next, we do the same thing for disability
coverage." Based on his review of these coverages, Coffman says
he inevitably suggests changes. "Finally, we offer our client a
no-obligation insurance review by an independent agency. We use a
no-pressure firm we've found that provides some excellent insights."
Ultimately it's sobering to realize that the
property/casualty industry, selling homeowners insurance as an
essential piece of every client's financial plan, is just as impaired
as the health-care industry or Social Security. The U.S. has tough
challenges ahead in repairing these systems, so critical to its
citizens' financial well-being. Financial advisors can and should play
a more active role, recognizing that, for most Americans, their home is
the most valuable asset they have. "If they don't build a moat around
the castle," says Commissioner McCarty, "they're in a position to lose
much of their financial security."
An independent financial advisor
since 1981, David J. Drucker, M.B.A., CFP, lost a fight with Farmers
Insurance, which paid nothing on his claim for extreme damage to his
home caused by snow and ice in December 2006.