It’s not just the very wealthy and business owners that are gravitating to PPLI and PPVAs: So are celebrity entertainers, divorcees, star athletes and inheritors. For example, one of the problems in the world of big money sports is that many athletes fail to recognize their careers are pretty short and the big money they’re making might have to last a long time. That’s where these products come into play.

There are also a lot of ways that PPLI and PPVAs can be part of a wealthy person’s philanthropic agenda. For example, combining a charitable trust with PPVAs can result in what’s referred to as a charitable retirement plan. The individual can have monies growing tax-deferred within the charitable trust until they retire. At their death, the remaining funds in the trust can go to the charities they support.

When you consider all the possibilities, PPLI and PPVAs have incredible investment tax mitigation benefits. They can also be extremely useful as part of a person’s financial and estate plan. And with PPLI there’s also a death benefit.

Prince: Would you say that PPLI is superior to traditional life insurance?

Sasaki: PPLI and traditional life insurance have different uses. If a person wants guarantees, then traditional life insurance is the better choice. So to fund a buy/sell agreement, traditional life insurance is often superior to PPLI.

Where life insurance is being used as part of an investment strategy, PPLI and PPVAs can usually provide a more tailored solution. Along these lines, the ability for a high-caliber investment professional to manage the monies as opposed to the insurance company or the need to select a mutual fund is tremendously appealing.

Prince: What is the process for creating a customized private placement life insurance policy?

Sasaki: For investment professionals, the first step is getting on a platform like CGS Financial Solutions or one of the other platforms. This usually starts with a letter of intent and a non-disclosure agreement. Then we would conduct due diligence on the investment professional, including a background check.

If this goes well, we address a number of administrative matters, from fees to custodians. When it comes to the custodian, for example, it will almost always be the same one the financial advisor is currently using. At this point, we execute the investment advisory agreement and the custodian agreement. When necessary, we file with the appropriate regulators and everyone is ready to go.

After reviewing the steps with an advisor and providing him the paperwork, he said that it’s a big deal to get on the platform. I agreed with him. There are a lot of places where financial advisors and other investment professionals can run afoul of being compliant, thereby potentially hurting their clients and themselves. We’re very serious and highly motivated about making sure that doesn’t ever happen. A lot of time and effort goes into every aspect of on-boarding an investment professional and ensuring that advisors’ customized PPLI and PPVA solution is and remains compliant.

Prince: What difficulties do investment professionals tend to face in incorporating PPLI and PPVAs into their practices?

Sasaki: A lot of financial advisors seem to believe that creating their own customized PPLI and PPVA is the end point. Actually, it’s the starting point.

From a business development standpoint, there are some very effective ways to use your customized PPLI and PPVA product. On the one hand, there are systematic approaches financial advisors can use to leverage the products to get more assets under management from current clients. At the same time, PPLI and PPVA can be instrumental as a central component in a process-driven strategy to cultivate centers of influence, especially attorneys and accountants.

Another potential complication deals with framing. That is, how do you most effectively position PPLI or a PPVA to a wealthy prospect or client? Again, there are proven methodologies that financial advisors can use, thereby significantly increasing the probability of success.

Putting this together, if the objective is to do a sensational job for affluent clients and raise considerable assets to manage, it’s not enough for financial advisors to just create customized PPLI and PPVA products. They have to constructively integrate these products into their business development plans and activities. That’s why we’ve built a business development support structure at CGS Financial Solutions.

Prince: Peter, thank you for your time.

Sasaki: Thank you.

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