March 11, 2025 • 21 mins
In this episode of ShiftShapers, Host David Saltzman interviews Dave Toeben, president of Insight Insurance Services, about how insurance professionals can enhance their business through business continuation planning. Dave shares his journey from focusing on group health insurance to specializing in buy-sell agreements, key person, and deferred compensation plans. They discuss the importance of reviewing buy-sell agreements, including recent legal changes such as the Conley case, and explore collaborative opportunities for health insurance advisors to expand their services and solidify client relationships.
This Episode is Sponsored by Benepower
BenePower is an AI-powered platform that helps advisors build high-impact, self-insured health plans quickly and seamlessly by integrating the best point solutions, eliminating inefficiencies, and improving collaboration. It streamlines plan creation, reduces costs, enhances member outcomes, and positions advisors as industry leaders. Learn more at Benepower.com.
Reach out to Dave Toeben at dave@look2insight.com or 615-636-1105
Scaling Your Insurance Practice: Insights from Business Continuation Planning
- Shift Beyond Group Health Insurance: Business continuation planning, buy-sell agreements, and key person insurance are essential for scaling a business beyond group health insurance.
- Importance of Buy-Sell Agreement Review: Regularly reviewing and updating buy-sell agreements is crucial to avoid unintended liabilities and ensure smooth business transitions in case of catastrophe.
- Disability Insurance Parallel: Often overlooked, disability insurance can be as crucial, if not more so, than life insurance in buy-sell agreements, providing necessary funds if a business owner becomes disabled.
- Partner Collaboration Opportunities: Health insurance advisors can partner with specialists in business continuation planning to offer comprehensive services without needing to master every aspect themselves.
- Educational and Revenue Potential: By engaging in business continuation planning, health insurance advisors can not only solidify client relationships but also significantly boost their revenue streams.
In This Episode
00:00 Introduction and Guest Welcome
00:45 Dave Toeben's Career Journey
01:13 Transition to Business Continuation Planning
02:30 Understanding Business Continuation Planning
03:55 Importance of Disability Insurance
06:18 Opportunities for Health Insurance Advisors
08:27 The Connolly Case and Its Implications
10:25 Partnering and Mentorship in Business Continuation
18:05 Choosing the Right Carriers
20:50 Conclusion and Contact Information
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
How can you scale your business if you can't scale
yourself or if you don't wannascale yourself?
We'll find out on this episodeof Shift Shapers.
Speaker 2 (00:10):
Change either energizes or paralyzes.
The choice is yours.
This is the Shift Shaperspodcast, bringing the employee
benefits industry interviewswith individuals and companies
who are shaping the industry'sshifts.
And now here's your host, davidSaltzman.
Speaker 1 (00:31):
And joining us.
To help answer that question ismy old buddy, dave Tobin.
Dave is president of InsightInsurance Services and a former
group health advisor who canhelp us.
So welcome Dave.
Speaker 3 (00:43):
Thanks, david for having me on the show.
Speaker 1 (00:45):
Our pleasure.
Tell us a little bit brieflyabout your journey.
We're always interested to findout how people ended up doing
what they're doing.
Speaker 3 (00:51):
Well, it's interesting.
When I was five years old, mygoal was to be an insurance
agent.
Speaker 1 (00:55):
I'm kidding Turn something so we can see your
nose grow while you say that.
Speaker 3 (00:59):
Yeah, yeah, there's Pinocchio here.
I've been in the business about27 years In the first 22, 23
years really focused in thegroup health market, more of the
five to about 100 market, andit's a good business.
The challenge was the ACA.
The Obamacare changed it somuch that about five years ago I
(01:19):
made a decision to say, hey, Ilove my clients but I wanted to
make a change into doingbuy-sell, key person deferred
comp, because it's somethingI've always done.
It was just I didn't believe Icould do it full-time and the
light bulb came off about fiveyears ago and so we decided to
(01:39):
go full-time into doing buy-selland key person deferred comp
plans for business owners.
Speaker 1 (01:45):
Had doing group health just stopped At a certain
point.
Did it just stop being fun?
Speaker 3 (01:50):
Yeah, you just basically took the words out of
my mouth.
I mean it.
You know we as benefit brokerswe know the ins, the outs, the
grinds and the daily BS and youknow when you call up a client
about health insurance they'reabout as interested as going to
the dentist or getting acolonoscopy.
It's just not a fun experienceanymore and it just started to
(02:11):
wear on us.
Speaker 1 (02:13):
So you know we're going to talk about this in a
couple of different contexts.
For folks who are thinkingthat's not a part of the
business, I want to be in, youdon't have to.
I want to be in, you don't haveto.
But it can still help you in anumber of ways to increase the
revenue into your practice andto create loyalty and stickiness
with your clients.
So let's talk a little bitfirst about what business
(02:33):
continuation planning is.
Can you give us kind of a briefintro 101?
Speaker 3 (02:38):
Yeah, I mean business continuation planning is pretty
simple.
In fact.
I was with a client a few weeksago and one of the key things
is it's a 50-year-old businessand second generation.
The dad passed away about 10years ago and the son's pretty
young, about 45, and his goalwas to continue this business so
(02:59):
he can do his heirs in thefuture.
And that's really as simple aswhat business continuation
planning is is to be able toplan to make sure that if
something catastrophic happensto an owner partner, that the
business will continue, becausewith I mean David, you know,
with no plan, nothing good isusually going to happen with it.
And typically what we do is wesit down with a business owner
(03:22):
and find out what the goals are,and in this case the client was
about 43 and a $25 millioncompany.
If something happens to him,it's like which building does he
start selling?
How does it get passed down tothe kids?
And so we're looking at fundingit with a $20 million life
insurance policy to help thebusiness continue and also pay
(03:42):
for the good Uncle Sam estatetax that's coming up.
Speaker 1 (03:46):
And there's also opportunities besides the life
insurance, which, okay, some ofour listeners might think okay,
life insurance, that's not myjam there's also an aspect of
funding for disability as well,isn't there?
Speaker 3 (03:58):
Yeah, that's actually that's a good point.
You have a greater chance ofbecoming disabled before you're
65 than you do of dying, andI've seen that firsthand with a
lot of clients and friends andstuff.
Disability is a key part of thebuy-sell or the buyout with a
business partner.
Speaker 1 (04:14):
And that's you know.
That's definitely somethingthat the folks at now NABIP,
formerly NAHU.
Actually, when it first startedit was a DI association Group.
Health insurance hadn't beeninvented yet.
It was almost 100 years ago.
It was way before the end ofthe Second World War and there
were a lot of DI dorks.
As a matter of fact, a couple ofweeks from now, we're going to
be joined by my old buddy, donChimay, from the principal to
(04:36):
talk about opportunities forfolks to branch back into what
used to be one of our corecompetencies.
But oftentimes I mean when I wasdoing buy-sell agreements I
often found that I would knockon somebody's door, ask to
review their agreement and say,you know, give me 15 minutes and
a chair and let me look, and Iknew what I was going to find.
(04:57):
I was going to find a buy-sellagreement that created the
liability in case of adisability, but it never been
funded because typically theseare sold by life.
Guys who don't do DI don't eventhink about DI.
They think their DI is theworld's shortest dirty word and
you know, when I started, it wasI brought guys in to work with,
like you, which was the impetusfor our conversation today.
(05:18):
But as I got more competentwith it, I thought, okay, I'm
just going to show these folksthat I'm the advisor they ought
to be working with, because youknow, your guy that you thought
was such a hotshot covered youfor life insurance, but you
created a liability, anobligation.
Where in the name of God areyou going to meet that kind of
an obligation if one of theprincipals gets disabled and it
was a great way to say they'renot taking care of all your
(05:41):
risks?
Do you find that often in yourpractice?
Speaker 3 (05:44):
Yeah, yeah, for every 100 buy-sell agreements I
review, there's probably fivethat are funded with disability
insurance.
So 95% have an unfundedliability that if something
happens to one of the businesspartners, there's no money.
And most business owners thinkthat, well, the bank will help
me out, They'll give me a loan.
I'm like the bank is not goingto give you any money.
(06:05):
You just lost half your assets.
The bank is not your friend.
They're your friend when youdon't need money, but when you
need money you won't get it, andso that's a key thing is the
disability buyout is rarely thatI see in there.
Speaker 1 (06:18):
So let's talk a little bit about the
opportunities here for peoplewho are health insurance
advisors and want to stay healthinsurance advisors.
Is it to learn about this?
I mean, certainly that's onepath, but there are folks who do
what you do, who are open toreferring them, bringing them in
or vice versa.
(06:38):
What are some examples of theway you've seen that work in
your practice?
Speaker 3 (06:43):
Well, one of the things I've seen in fact, the
client I was just talking aboutis it was a benefits advisor
that brought us in and that wasoutside of Nashville area.
About six months ago there was aclient in Minnesota that was
referred to us by a benefitsadvisor there, and it's really
simple because I mean, I knowhealth insurance really well,
but I also know now that I don'twant to do it, but I know the
(07:05):
buy-sell and the key person inthe deferred comp.
It's as simple as doing a jointcall, whether it's a Zoom or an
in-person meeting, because thenumber one goal is to make sure
that your client is taken careof.
Probably the key thing I'veseen is that we all have a hard
time trusting people Becausewe've all been burnt by
referring somebody to somebody,and so the trust between us and
(07:30):
the benefit advisor or thereferral partner is key, and
that's our number one goal is tomake the benefits advisor, the
agency, look better than whatthey are and there's a decent
paycheck at the end of the dayif they want to do some revenue
sharing on it, If you decide togo your own, though I want to be
clear about this.
Speaker 1 (07:46):
You know.
If you decide to go your ownthough I want to be clear about
this you mentioned that ACA wasone of the reasons that, for you
, doing group health insurancestopped being fun, started being
more of a burden, etc.
And you know you suffered thesame problems that everybody
else does.
As the expectations on you asan advisor got greater in
(08:06):
different areas, like complianceand things like that.
You weren't being paid anymore,but folks were blowing up your
phone with all kinds ofquestions.
Even in this area, there'sconstant education.
I mean, there was just adecision called Connolly that
you know.
If you were just doing thispart-time and didn't really know
your stuff, you might be in awhole world of hurt, or a client
(08:26):
might be.
What was Connolly all about?
How'd that change things?
Speaker 3 (08:30):
Well, the Connelly thing is something that we were
tracking for the last 10, 12years, but what happened was
there's two brothers inPennsylvania small manufacturing
company I think it was worthabout four or $5 million, and
the old brother, thomas, passedaway, and basically what
happened was is that the valueof his estate was over the
(08:52):
estate limit and they hadinsurance.
They actually bought lifeinsurance.
The problem was the corporationowned it, but they never
followed their buy-sellagreement.
It was supposed to be reviewedannually with an annual sort of
certificate of agreed value, andthat's when.
So when the guy died, the IRScame knocking on the door and
said, hey, you owe us more moneybecause you never followed the
(09:13):
agreement.
And the simple solution.
So we have a client up inMinnesota I was just talking
about, very similar, about a $15million business.
They bought insurance.
The problem was the corporationowns the insurance, and that's
where the problem with theConley is and that's where we
see a lot of these buy-sellagreements are funded.
(09:34):
They're funded, but theinsurance should be inside of
each partner's name instead ofthe corporation.
Now it gets complicated if youhave a bunch of owners, but so
those are the ins and outs ofhow do you set it up to make
sure that the insurance doesn'tget part of the, you know, part
of the business value.
Speaker 1 (09:52):
So there's still maybe not in the ERISA sense,
but there's still a fiduciaryresponsibility on the part of
the advisor, isn't there?
Speaker 3 (09:58):
There is yeah and if you do it wrong it's a huge tax
bill for you know, for theclient.
Speaker 1 (10:04):
And a huge lawyer bill for the advisor?
I suspect yeah.
So let's talk about this alittle bit more and let's run
some scenarios.
So I'm primarily a healthinsurance advisor, but I need to
grow my book.
I don't want to get into allthis buy sell gobble, do I'm not
even really sure?
I want to talk about thedisability part of it.
What do I do?
Speaker 3 (10:25):
Well, there's two things you can do.
You can try it or you canpartner with an advisor like
myself and we partner a lot withbenefit advisors, cpas, other
referrals but the number onegoal is to take care of the
client.
The number two goal will be isto solidify the relationship.
Know that the more that wesolidify the relationship, the
(10:47):
less chance that they're goingto move their benefits book to
somebody else.
And so the kind of the processis pretty simple An introduction
by the benefit advisor and thenusually both of us will do an
in-person call or a joint Zoomcall and then we kind of take it
from there.
Or the benefits advisor can bethey can be available as much as
(11:10):
they want or do as little asthey want, but we always keep,
you know, our the benefitadvisor up to date on everything
.
Speaker 1 (11:18):
Now my entree when I was doing that was asking people
if they had recently had theirbuy sell agreements reviewed,
and the reason that I went thatdirection was the reviewed,
instead of getting into theweeds, was there's only really
two answers yes and no, or wedon't have a buy-sell agreement.
What are you talking about In?
Either case it gave me theopportunity to have an opening
(11:52):
no-transcript.
Speaker 3 (11:58):
Well, the conversation is cross-selling,
so we all cross-sell everything,and the question you just
brought up to a business owner.
So, david, when was the lasttime that you reviewed your
buy-sell?
Most of them will say, ah, it'sbeen 5, 10, 15 years, and so
every 2, 3 years.
Now you should really reviewyour buy-sell agreement,
especially with the ConleySupreme Court case.
That is, and I don't mean toharp on it, but the Supreme
(12:19):
Court voted unanimously 9 tonothing in favor of the IRS, and
it was Justice Thomas thatwrote the argument.
That's why this is significant.
So this is not just a littlething, but business owners
really need to take a look attheir buy-sell agreement, and
the benefits advisor is a keyplayer that can help their
clients take care of that.
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And now back to ourconversation.
So let's take another scenario.
What if I'm a health insuranceadvisor primarily, and I want to
dip my toe into this.
How do I do that?
What would you suggest?
Speaker 3 (14:42):
I would suggest to get a good mentor, somebody that
really knows us, becausethere's a lot of different
things that are in and out.
But really get a good mentor.
Or we partner up with a lot ofbenefits advisors, you know, to
help their clients and also helptheir cash flow, so we can do a
revenue split with them as well.
Speaker 1 (14:56):
So there is opportunity for splitting cases.
Speaker 3 (14:59):
Yeah, yeah, in fact, the client up in past Nashville
that we just saw, the advisorthat brought us in, I mean this
is a big, big life ticket about20 million.
They'll stand to make about$150,000 on it.
I mean that's you know morethan most of them.
But we see a lot of benefitadvisors that are able to make
five to 10,000 bucks on theirclients per client.
(15:21):
So it's a legitimateopportunity for not doing much
work, plus solidifying, plussolidifying their relationship
Is there in most states to yourknowledge.
Speaker 1 (15:30):
I know you work in a few different states.
In most states is theredifferent licensure required
beyond what I might have to havea health insurance license.
Speaker 3 (15:40):
No, it's just a life and health license.
Speaker 1 (15:43):
That's interesting.
So it's a fairly simple way toget into kind of raising some
more revenue for your firm andcreating stickier client
relationships.
Do you have any stories thatmaybe you can tell us about how
what you guys have done hasreflected back in a positive way
on the health insurance broker?
Speaker 3 (16:03):
Yeah, I mean so the client that we were just talking
about up in Nashville area.
So that advisor has been aclient or that client's been a
client of the advisor for about25 years and they've always
tried to find a way of how do wesolve that problem of if the
owner dies, how does thebusiness continue.
(16:23):
And so the advisor had actuallythat brought us in, had started
talking with some otheradvisors about it, but the other
advisors didn't really lookinto the details.
You know, like in healthinsurance, you really got to be
into the weeds and that's wherewe come in especially well is on
the buy, sell and the keyperson and the deferred comp.
So one of the key statementsthat the client made, he says
(16:47):
gosh, we've met with two orthree other advisors and this
guy, dave Tobin, really sat downand explained this stuff in
English.
It was not big picture, not alot of garbage and jargon and
stuff, and that's one of thebiggest problems is that I think
we as professionals, we explainthis stuff way too complicated,
(17:09):
and so that's the goal is tokeep it simple.
That's one of the things Ilearned from you years ago.
Speaker 1 (17:14):
Well, that's why I still have a marketing practice,
because people tend to equatethrowing a lot of information at
a client with proving that, hey, I'm a real professional, I
really understand this stuff.
It's the old saw, you know.
If I ask you what time it is, Iwant to know that.
You know it's 10 minutes to 10.
I don't want you to tell me howto build a watch.
Maybe later on I want to learnhow to build a watch, but right
(17:34):
now I just want to know whattime it is.
You know, no-transcript Arethere?
(17:58):
If I wanted to kind of go morefull tilt boogie into it.
Not every life insurancecarrier is really smart and good
at, or even cares to do buysell agreements.
Same thing with not every DIcarriers.
Are there certain carriers thatare better at this than others?
Speaker 3 (18:09):
Oh, definitely.
I mean there's over 500different life insurance
carriers but we probably have ahandful of five to 10 that we
work with on a daily basis.
So, like Cincinnati, life isreally really good If we don't
have to go through the wholeformulation of how much is your
business worth to get avaluation.
They will do a lot of issuingbased upon what the business
(18:31):
owner says it's worth up to acertain amount.
We're like Prudential hands offman.
You've got to get everythingdocumented and stuff.
So there's ins and outs andthere's just carriers that are
better at stuff, especially inthe disability market.
Principal is a great disabilitycarrier.
We do principal quite a bit onthe disability market.
You know principal is a greatdisability carrier.
We do principal quite a bit onthe disability end.
Speaker 1 (18:50):
Yeah, you and I are both principal fans, probably
because we both were in thatpart of the business and saw
what they were capable of doing,and they also I don't know if
they still do.
They used to provide sampleagreements and do an awful lot
of the work that otherwise you'dhave to spend a bunch of bucks
significant money on youraccountant and your attorney to
do.
They still do that kind ofstuff.
Speaker 3 (19:07):
Yeah, they do, and that's one of the reasons that
we really like Principal andPacific Life and National I mean
just a lot of them because theyprovide that added value to us.
In fact, sometimes they'll evenget on the line with the CPA or
the benefits advisor and theclient at the same time and
really go through some of thereally detailed technical
questions, because some of thestuff does get pretty deep into
(19:28):
the weeds.
Speaker 1 (19:28):
Yeah, you know, I also think one of the reasons
that I wanted to have thisconversation on the podcast was
because, knowing your backgroundand knowing the student that
you are of the health benefitsside of it, I think it's really
important if you're an advisorand you're going to partner up
with somebody whether it's, youknow, just to do the occasional
(19:51):
case, as we were talking about,or whether it's to have a mentor
I think you really owe it toyourself and to your agency to
find somebody who knows thatside of the business as well, so
they understand clearly whatyou're dealing with and, frankly
, how to talk to the client,Because there are tripwires for
those folks who've only dealtwith clients with health
insurance and if they hit one ofthose, they can blow up not
only the sale but the clientrelationship.
Speaker 3 (20:12):
Exactly, yeah, and I've seen that happen.
I mean, you know.
So there's, you know, thebusiness owner doing health
insurance and buy, sell andkeepers, and it's two separate
things.
If you try to do both at once,you'll get, you'll lose both.
Speaker 1 (20:27):
That's.
You know.
That's the old South Carolinathing you can't chase two
rabbits, and we've seen thathappen time and time again.
So it's a simple question,isn't it?
If you're a benefits advisor,the question of when did you
last have your buy-sellagreement reviewed is a very
simple opening, and you caneither say, hey, I can help you
with that, or I got a guy.
Speaker 3 (20:48):
Exactly.
Speaker 1 (20:49):
Yes, it's that easy, Well, and you know great place
to end our conversation fortoday.
I do want to say we'll have alink to some other information
in the show notes.
You can always, you know,contact Dave at Insight
Insurance Services.
We'll have a link again in theshow notes.
But, Dave, thanks so much forhelping us understand where
there might be someopportunities that maybe folks
(21:09):
hadn't thought about before toboth create stickier client
relationships and to add somemoney to their bottom line.
Speaker 3 (21:16):
David, thanks for having me.
I appreciate it.
Speaker 1 (21:23):
I want to give a quick shout out to our sponsor
and our producer, hatcher Media.
Hey, if you need podcastproduction or professional
graphic design, josh Hatcher isthe expert to contact For more
information.
Visit him at HatcherMedianet.
That's H-A-T-C-H-E-R Media dotnet.
Speaker 2 (21:41):
This Shift Shapers podcast is copyrighted content
and may not be reproduced inwhole or in part without the
express written permission ofShift Shapers Solutions LLC.
Copyright 2024.
How can you scale your business if you can't scale
yourself or if you don't wannascale yourself?
We'll find out on this episodeof Shift Shapers.
Speaker 2 (00:10):
Change either energizes or paralyzes.
The choice is yours.
This is the Shift Shaperspodcast, bringing the employee
benefits industry interviewswith individuals and companies
who are shaping the industry'sshifts.
And now here's your host, davidSaltzman.
Speaker 1 (00:31):
And joining us.
To help answer that question ismy old buddy, dave Tobin.
Dave is president of InsightInsurance Services and a former
group health advisor who canhelp us.
So welcome Dave.
Speaker 3 (00:43):
Thanks, david for having me on the show.
Speaker 1 (00:45):
Our pleasure.
Tell us a little bit brieflyabout your journey.
We're always interested to findout how people ended up doing
what they're doing.
Speaker 3 (00:51):
Well, it's interesting.
When I was five years old, mygoal was to be an insurance
agent.
Speaker 1 (00:55):
I'm kidding Turn something so we can see your
nose grow while you say that.
Speaker 3 (00:59):
Yeah, yeah, there's Pinocchio here.
I've been in the business about27 years In the first 22, 23
years really focused in thegroup health market, more of the
five to about 100 market, andit's a good business.
The challenge was the ACA.
The Obamacare changed it somuch that about five years ago I
(01:19):
made a decision to say, hey, Ilove my clients but I wanted to
make a change into doingbuy-sell, key person deferred
comp, because it's somethingI've always done.
It was just I didn't believe Icould do it full-time and the
light bulb came off about fiveyears ago and so we decided to
(01:39):
go full-time into doing buy-selland key person deferred comp
plans for business owners.
Speaker 1 (01:45):
Had doing group health just stopped At a certain
point.
Did it just stop being fun?
Speaker 3 (01:50):
Yeah, you just basically took the words out of
my mouth.
I mean it.
You know we as benefit brokerswe know the ins, the outs, the
grinds and the daily BS and youknow when you call up a client
about health insurance they'reabout as interested as going to
the dentist or getting acolonoscopy.
It's just not a fun experienceanymore and it just started to
(02:11):
wear on us.
Speaker 1 (02:13):
So you know we're going to talk about this in a
couple of different contexts.
For folks who are thinkingthat's not a part of the
business, I want to be in, youdon't have to.
I want to be in, you don't haveto.
But it can still help you in anumber of ways to increase the
revenue into your practice andto create loyalty and stickiness
with your clients.
So let's talk a little bitfirst about what business
(02:33):
continuation planning is.
Can you give us kind of a briefintro 101?
Speaker 3 (02:38):
Yeah, I mean business continuation planning is pretty
simple.
In fact.
I was with a client a few weeksago and one of the key things
is it's a 50-year-old businessand second generation.
The dad passed away about 10years ago and the son's pretty
young, about 45, and his goalwas to continue this business so
(02:59):
he can do his heirs in thefuture.
And that's really as simple aswhat business continuation
planning is is to be able toplan to make sure that if
something catastrophic happensto an owner partner, that the
business will continue, becausewith I mean David, you know,
with no plan, nothing good isusually going to happen with it.
And typically what we do is wesit down with a business owner
(03:22):
and find out what the goals are,and in this case the client was
about 43 and a $25 millioncompany.
If something happens to him,it's like which building does he
start selling?
How does it get passed down tothe kids?
And so we're looking at fundingit with a $20 million life
insurance policy to help thebusiness continue and also pay
(03:42):
for the good Uncle Sam estatetax that's coming up.
Speaker 1 (03:46):
And there's also opportunities besides the life
insurance, which, okay, some ofour listeners might think okay,
life insurance, that's not myjam there's also an aspect of
funding for disability as well,isn't there?
Speaker 3 (03:58):
Yeah, that's actually that's a good point.
You have a greater chance ofbecoming disabled before you're
65 than you do of dying, andI've seen that firsthand with a
lot of clients and friends andstuff.
Disability is a key part of thebuy-sell or the buyout with a
business partner.
Speaker 1 (04:14):
And that's you know.
That's definitely somethingthat the folks at now NABIP,
formerly NAHU.
Actually, when it first startedit was a DI association Group.
Health insurance hadn't beeninvented yet.
It was almost 100 years ago.
It was way before the end ofthe Second World War and there
were a lot of DI dorks.
As a matter of fact, a couple ofweeks from now, we're going to
be joined by my old buddy, donChimay, from the principal to
(04:36):
talk about opportunities forfolks to branch back into what
used to be one of our corecompetencies.
But oftentimes I mean when I wasdoing buy-sell agreements I
often found that I would knockon somebody's door, ask to
review their agreement and say,you know, give me 15 minutes and
a chair and let me look, and Iknew what I was going to find.
(04:57):
I was going to find a buy-sellagreement that created the
liability in case of adisability, but it never been
funded because typically theseare sold by life.
Guys who don't do DI don't eventhink about DI.
They think their DI is theworld's shortest dirty word and
you know, when I started, it wasI brought guys in to work with,
like you, which was the impetusfor our conversation today.
(05:18):
But as I got more competentwith it, I thought, okay, I'm
just going to show these folksthat I'm the advisor they ought
to be working with, because youknow, your guy that you thought
was such a hotshot covered youfor life insurance, but you
created a liability, anobligation.
Where in the name of God areyou going to meet that kind of
an obligation if one of theprincipals gets disabled and it
was a great way to say they'renot taking care of all your
(05:41):
risks?
Do you find that often in yourpractice?
Speaker 3 (05:44):
Yeah, yeah, for every 100 buy-sell agreements I
review, there's probably fivethat are funded with disability
insurance.
So 95% have an unfundedliability that if something
happens to one of the businesspartners, there's no money.
And most business owners thinkthat, well, the bank will help
me out, They'll give me a loan.
I'm like the bank is not goingto give you any money.
(06:05):
You just lost half your assets.
The bank is not your friend.
They're your friend when youdon't need money, but when you
need money you won't get it, andso that's a key thing is the
disability buyout is rarely thatI see in there.
Speaker 1 (06:18):
So let's talk a little bit about the
opportunities here for peoplewho are health insurance
advisors and want to stay healthinsurance advisors.
Is it to learn about this?
I mean, certainly that's onepath, but there are folks who do
what you do, who are open toreferring them, bringing them in
or vice versa.
(06:38):
What are some examples of theway you've seen that work in
your practice?
Speaker 3 (06:43):
Well, one of the things I've seen in fact, the
client I was just talking aboutis it was a benefits advisor
that brought us in and that wasoutside of Nashville area.
About six months ago there was aclient in Minnesota that was
referred to us by a benefitsadvisor there, and it's really
simple because I mean, I knowhealth insurance really well,
but I also know now that I don'twant to do it, but I know the
(07:05):
buy-sell and the key person inthe deferred comp.
It's as simple as doing a jointcall, whether it's a Zoom or an
in-person meeting, because thenumber one goal is to make sure
that your client is taken careof.
Probably the key thing I'veseen is that we all have a hard
time trusting people Becausewe've all been burnt by
referring somebody to somebody,and so the trust between us and
(07:30):
the benefit advisor or thereferral partner is key, and
that's our number one goal is tomake the benefits advisor, the
agency, look better than whatthey are and there's a decent
paycheck at the end of the dayif they want to do some revenue
sharing on it, If you decide togo your own, though I want to be
clear about this.
Speaker 1 (07:46):
You know.
If you decide to go your ownthough I want to be clear about
this you mentioned that ACA wasone of the reasons that, for you
, doing group health insurancestopped being fun, started being
more of a burden, etc.
And you know you suffered thesame problems that everybody
else does.
As the expectations on you asan advisor got greater in
(08:06):
different areas, like complianceand things like that.
You weren't being paid anymore,but folks were blowing up your
phone with all kinds ofquestions.
Even in this area, there'sconstant education.
I mean, there was just adecision called Connolly that
you know.
If you were just doing thispart-time and didn't really know
your stuff, you might be in awhole world of hurt, or a client
(08:26):
might be.
What was Connolly all about?
How'd that change things?
Speaker 3 (08:30):
Well, the Connelly thing is something that we were
tracking for the last 10, 12years, but what happened was
there's two brothers inPennsylvania small manufacturing
company I think it was worthabout four or $5 million, and
the old brother, thomas, passedaway, and basically what
happened was is that the valueof his estate was over the
(08:52):
estate limit and they hadinsurance.
They actually bought lifeinsurance.
The problem was the corporationowned it, but they never
followed their buy-sellagreement.
It was supposed to be reviewedannually with an annual sort of
certificate of agreed value, andthat's when.
So when the guy died, the IRScame knocking on the door and
said, hey, you owe us more moneybecause you never followed the
(09:13):
agreement.
And the simple solution.
So we have a client up inMinnesota I was just talking
about, very similar, about a $15million business.
They bought insurance.
The problem was the corporationowns the insurance, and that's
where the problem with theConley is and that's where we
see a lot of these buy-sellagreements are funded.
(09:34):
They're funded, but theinsurance should be inside of
each partner's name instead ofthe corporation.
Now it gets complicated if youhave a bunch of owners, but so
those are the ins and outs ofhow do you set it up to make
sure that the insurance doesn'tget part of the, you know, part
of the business value.
Speaker 1 (09:52):
So there's still maybe not in the ERISA sense,
but there's still a fiduciaryresponsibility on the part of
the advisor, isn't there?
Speaker 3 (09:58):
There is yeah and if you do it wrong it's a huge tax
bill for you know, for theclient.
Speaker 1 (10:04):
And a huge lawyer bill for the advisor?
I suspect yeah.
So let's talk about this alittle bit more and let's run
some scenarios.
So I'm primarily a healthinsurance advisor, but I need to
grow my book.
I don't want to get into allthis buy sell gobble, do I'm not
even really sure?
I want to talk about thedisability part of it.
What do I do?
Speaker 3 (10:25):
Well, there's two things you can do.
You can try it or you canpartner with an advisor like
myself and we partner a lot withbenefit advisors, cpas, other
referrals but the number onegoal is to take care of the
client.
The number two goal will be isto solidify the relationship.
Know that the more that wesolidify the relationship, the
(10:47):
less chance that they're goingto move their benefits book to
somebody else.
And so the kind of the processis pretty simple An introduction
by the benefit advisor and thenusually both of us will do an
in-person call or a joint Zoomcall and then we kind of take it
from there.
Or the benefits advisor can bethey can be available as much as
(11:10):
they want or do as little asthey want, but we always keep,
you know, our the benefitadvisor up to date on everything
.
Speaker 1 (11:18):
Now my entree when I was doing that was asking people
if they had recently had theirbuy sell agreements reviewed,
and the reason that I went thatdirection was the reviewed,
instead of getting into theweeds, was there's only really
two answers yes and no, or wedon't have a buy-sell agreement.
What are you talking about In?
Either case it gave me theopportunity to have an opening
(11:52):
no-transcript.
Speaker 3 (11:58):
Well, the conversation is cross-selling,
so we all cross-sell everything,and the question you just
brought up to a business owner.
So, david, when was the lasttime that you reviewed your
buy-sell?
Most of them will say, ah, it'sbeen 5, 10, 15 years, and so
every 2, 3 years.
Now you should really reviewyour buy-sell agreement,
especially with the ConleySupreme Court case.
That is, and I don't mean toharp on it, but the Supreme
(12:19):
Court voted unanimously 9 tonothing in favor of the IRS, and
it was Justice Thomas thatwrote the argument.
That's why this is significant.
So this is not just a littlething, but business owners
really need to take a look attheir buy-sell agreement, and
the benefits advisor is a keyplayer that can help their
clients take care of that.
Speaker 1 (12:40):
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And now back to ourconversation.
So let's take another scenario.
What if I'm a health insuranceadvisor primarily, and I want to
dip my toe into this.
How do I do that?
What would you suggest?
Speaker 3 (14:42):
I would suggest to get a good mentor, somebody that
really knows us, becausethere's a lot of different
things that are in and out.
But really get a good mentor.
Or we partner up with a lot ofbenefits advisors, you know, to
help their clients and also helptheir cash flow, so we can do a
revenue split with them as well.
Speaker 1 (14:56):
So there is opportunity for splitting cases.
Speaker 3 (14:59):
Yeah, yeah, in fact, the client up in past Nashville
that we just saw, the advisorthat brought us in, I mean this
is a big, big life ticket about20 million.
They'll stand to make about$150,000 on it.
I mean that's you know morethan most of them.
But we see a lot of benefitadvisors that are able to make
five to 10,000 bucks on theirclients per client.
(15:21):
So it's a legitimateopportunity for not doing much
work, plus solidifying, plussolidifying their relationship
Is there in most states to yourknowledge.
Speaker 1 (15:30):
I know you work in a few different states.
In most states is theredifferent licensure required
beyond what I might have to havea health insurance license.
Speaker 3 (15:40):
No, it's just a life and health license.
Speaker 1 (15:43):
That's interesting.
So it's a fairly simple way toget into kind of raising some
more revenue for your firm andcreating stickier client
relationships.
Do you have any stories thatmaybe you can tell us about how
what you guys have done hasreflected back in a positive way
on the health insurance broker?
Speaker 3 (16:03):
Yeah, I mean so the client that we were just talking
about up in Nashville area.
So that advisor has been aclient or that client's been a
client of the advisor for about25 years and they've always
tried to find a way of how do wesolve that problem of if the
owner dies, how does thebusiness continue.
(16:23):
And so the advisor had actuallythat brought us in, had started
talking with some otheradvisors about it, but the other
advisors didn't really lookinto the details.
You know, like in healthinsurance, you really got to be
into the weeds and that's wherewe come in especially well is on
the buy, sell and the keyperson and the deferred comp.
So one of the key statementsthat the client made, he says
(16:47):
gosh, we've met with two orthree other advisors and this
guy, dave Tobin, really sat downand explained this stuff in
English.
It was not big picture, not alot of garbage and jargon and
stuff, and that's one of thebiggest problems is that I think
we as professionals, we explainthis stuff way too complicated,
(17:09):
and so that's the goal is tokeep it simple.
That's one of the things Ilearned from you years ago.
Speaker 1 (17:14):
Well, that's why I still have a marketing practice,
because people tend to equatethrowing a lot of information at
a client with proving that, hey, I'm a real professional, I
really understand this stuff.
It's the old saw, you know.
If I ask you what time it is, Iwant to know that.
You know it's 10 minutes to 10.
I don't want you to tell me howto build a watch.
Maybe later on I want to learnhow to build a watch, but right
(17:34):
now I just want to know whattime it is.
You know, no-transcript Arethere?
(17:58):
If I wanted to kind of go morefull tilt boogie into it.
Not every life insurancecarrier is really smart and good
at, or even cares to do buysell agreements.
Same thing with not every DIcarriers.
Are there certain carriers thatare better at this than others?
Speaker 3 (18:09):
Oh, definitely.
I mean there's over 500different life insurance
carriers but we probably have ahandful of five to 10 that we
work with on a daily basis.
So, like Cincinnati, life isreally really good If we don't
have to go through the wholeformulation of how much is your
business worth to get avaluation.
They will do a lot of issuingbased upon what the business
(18:31):
owner says it's worth up to acertain amount.
We're like Prudential hands offman.
You've got to get everythingdocumented and stuff.
So there's ins and outs andthere's just carriers that are
better at stuff, especially inthe disability market.
Principal is a great disabilitycarrier.
We do principal quite a bit onthe disability market.
You know principal is a greatdisability carrier.
We do principal quite a bit onthe disability end.
Speaker 1 (18:50):
Yeah, you and I are both principal fans, probably
because we both were in thatpart of the business and saw
what they were capable of doing,and they also I don't know if
they still do.
They used to provide sampleagreements and do an awful lot
of the work that otherwise you'dhave to spend a bunch of bucks
significant money on youraccountant and your attorney to
do.
They still do that kind ofstuff.
Speaker 3 (19:07):
Yeah, they do, and that's one of the reasons that
we really like Principal andPacific Life and National I mean
just a lot of them because theyprovide that added value to us.
In fact, sometimes they'll evenget on the line with the CPA or
the benefits advisor and theclient at the same time and
really go through some of thereally detailed technical
questions, because some of thestuff does get pretty deep into
(19:28):
the weeds.
Speaker 1 (19:28):
Yeah, you know, I also think one of the reasons
that I wanted to have thisconversation on the podcast was
because, knowing your backgroundand knowing the student that
you are of the health benefitsside of it, I think it's really
important if you're an advisorand you're going to partner up
with somebody whether it's, youknow, just to do the occasional
(19:51):
case, as we were talking about,or whether it's to have a mentor
I think you really owe it toyourself and to your agency to
find somebody who knows thatside of the business as well, so
they understand clearly whatyou're dealing with and, frankly
, how to talk to the client,Because there are tripwires for
those folks who've only dealtwith clients with health
insurance and if they hit one ofthose, they can blow up not
only the sale but the clientrelationship.
Speaker 3 (20:12):
Exactly, yeah, and I've seen that happen.
I mean, you know.
So there's, you know, thebusiness owner doing health
insurance and buy, sell andkeepers, and it's two separate
things.
If you try to do both at once,you'll get, you'll lose both.
Speaker 1 (20:27):
That's.
You know.
That's the old South Carolinathing you can't chase two
rabbits, and we've seen thathappen time and time again.
So it's a simple question,isn't it?
If you're a benefits advisor,the question of when did you
last have your buy-sellagreement reviewed is a very
simple opening, and you caneither say, hey, I can help you
with that, or I got a guy.
Speaker 3 (20:48):
Exactly.
Speaker 1 (20:49):
Yes, it's that easy, Well, and you know great place
to end our conversation fortoday.
I do want to say we'll have alink to some other information
in the show notes.
You can always, you know,contact Dave at Insight
Insurance Services.
We'll have a link again in theshow notes.
But, Dave, thanks so much forhelping us understand where
there might be someopportunities that maybe folks
(21:09):
hadn't thought about before toboth create stickier client
relationships and to add somemoney to their bottom line.
Speaker 3 (21:16):
David, thanks for having me.
I appreciate it.
Speaker 1 (21:23):
I want to give a quick shout out to our sponsor
and our producer, hatcher Media.
Hey, if you need podcastproduction or professional
graphic design, josh Hatcher isthe expert to contact For more
information.
Visit him at HatcherMedianet.
That's H-A-T-C-H-E-R Media dotnet.
Speaker 2 (21:41):
This Shift Shapers podcast is copyrighted content
and may not be reproduced inwhole or in part without the
express written permission ofShift Shapers Solutions LLC.
Copyright 2024.
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