Welcome to Small Business Spotlight presented by JAISIN Insurance Solutions. I am your host, Racquel Goldy. The goal is to bring more awareness to businesses and entrepreneurs in the local community.  Today I am joined by Steven Goodman of SHG Planning.

Watch the video on YouTube here.

Tell me more about SHG Planning and what it’s like to be a trust advisor?

My firm does a lot of different things for affluent families.  I would say business succession planning is my main niche, and that is really dealing with business owners on the succession of their business, whether it would be to their families, to other partners they have, or to key employees.  I am not a business broker; I am not somebody that goes out to try to find somebody a buyer for their business whether they are doing an ESOP or they are doing estate planning with their children or buy/sell planning with partners.  I get involved in guiding people in those areas.  I also do a lot of work in estate planning which dovetails into that, and that would be for both estate planning for the business and other assets.  I get involved in sophisticated insurance planning, an area of risk management different than JAISIN’s business; mine is more focused on life insurance, long-term care, and disability.  I don’t really get involved in health or any kind of general property and casualty insurance.  As far as a trust advisor, most of my clients, if they are doing it right, have a team of advisors they trust that compliment one another.  One person is usually their CPA, and they usually have a trust in the estate and are more involved.  They have usually a financial advisor, somebody that may be managing their money.  Somebody like myself will handle all of those forms of insurance, and somebody like Jason will handle other aspects of insurance for the client.

What made you start your own company?

I started out in public accounting; I worked for about five years for a major CPA firm, KPMG, it’s one of the big four firms.  While I was there, I became certified as a CPA, and also have my MBA in finance.  I then went to work for JP Morgan in their private bank trust and investment division, and right before I was starting a family, I said if I am going to take a chance in life and try to go out on my own, this is the time to do it.  Basically, I decided to go into my own business. I have had always been very interested in all aspects of the kind of planning that I get involved in and just decided to give it a shot and, thankfully, it worked out.

Why should wealth management and insurance go hand in hand?

There is kind of wealth management and wealth preservation.  You know wealth management could also be called wealth accumulation, that is working with somebody to invest your money in the hopes that you are going to have a properly diversified portfolio from a risk and reward standpoint.  Over time, it is going to accumulate to provide you with money you need to meet all of your needs both before you retire and after you retire.  Life insurance usually falls into the risk management and wealth preservation side of the equation, which are what kind of things could go wrong that will stop you from being able to accumulate the kind of money you want to or be able to pass that money down to your family in a tax-efficient manner.  That is where insurance and wealth preservation comes into the plan. 

Why do you think high net-worth individuals should have insurance?

Let’s say we talk specifically on life insurance here; it depends, everybody’s situation is different.  In the early years you could have what you would not necessarily call a high net-worth individual that has accumulated a substantial asset, but somebody that has a really good income.  Usually in the early years, the life insurance is primarily there to replace that person’s income, whether it’s the husband or the wife or both.  If they are working and you want to know that if – God forbid – something happens to them, they get sick and die and their income goes away, that their family has something to provide them with what they need to live a nice lifestyle.  It could also be where you have a business, but the business either isn’t salable, or if it was salable, the price would be severely hampered by you not being there.  One thing is to negotiate the sale of your business while you are alive and healthy, and another is for a spouse to try to do it when you are not there.  So the second reason would be to provide a replacement for the asset that has been lost by you passing away.  In my business, I am usually dealing with people that already have a substantial amount of assets, and there it’s usually used for one of a few reasons.

A. To provide liquidity to pay estate taxes, when the husband or wife is no longer there. 

B. To provide equitable distributions; so if I have three kids and one is in my business and two are not, and most of my money is in my business and I pass that business down to my son or daughter that is in that business, what am I going to give to my other children?  That is the second reason you would buy it.

C. Buy/sell planning: you could be in business with other partners, and if one of them dies, the insurance is used to buy out the deceased partner’s estate so that it does not put a burden on the business.

D. Complicated situations with second marriages where some individual has a pre-nup and they are going to provide their money principally to their children from their first marriage, and now they have a pre-nup.  They may buy insurance to provide something for their second spouse so they receive something if something would have happened to them.

There are other reasons, but those are some of the major reasons that I get involved with the clients.

How do you decide the proper insurance policies to cover?

There is usually two sides to this; how much does the client need, and then what type of coverage.  The type of coverage is usually determined by two things: how long they need it for and what they could afford to spend on insurance.  If the need is temporary, like I just want to have insurance; we are going to sell our business in ten years, but if I die in next ten years I want to have insurance to cover a buy-out, or if I have a 15-year mortgage and I want insurance till the end of my mortgage, or if I have 15 years until my kids graduate from college and I want insurance, then normally you buy term insurance because there is a fixed term of years that you need the insurance for.  If somebody has a more permanent need for the insurance like estate planning purposes where they need it until they die or equitable distribution because at some point they are going to want to provide something to the other kids when they die or they have a business, but they have no intention of ever selling it and they want the insurance to be there for a long time, then you need some type of permanent insurance.  You also have to get involved in how much is the right amount of insurance.  We can spend hours on that as there is no “this is the right way to do it,” and at the end of the day, to be honest, how much things cost dictates.  If insurance was free, people would buy a hundred trillion dollars worth of it, but it’s not free.  At the end of the day, what they are willing to spend on insurance most times impacts what I provide to them, even though that may not be what they should be buying.  But I don’t have any choice because within their budget there are no other options to provide them. Always, always, what it costs is a big factor.

When looking through your testimonials on your website, I saw one that really stood out: It says, integrity, knowledgeable, and one of the most honest professionals I have ever met. How does it feels to have testimonials like this on your website and know that people think this highly of you and trust you?

It’s very important; what I say is I know who I am and I know who I am not, and there are many people that are in sales whether it’s life insurance, real estate, property and casualty insurance, selling cars, it could be any kind of sales profession.  There are many people that are very, very successful in selling because:

A. They happen to be very talented as a salesperson, and

B. They kind of know how to play the game; they are good golfer, they are good tennis player, they go onto country clubs, they are great at entertaining people. 

I get my business not for that, I get my business because the people who work with me feel, both in terms of my technical competence and my integrity and honesty, and when you combine that together, that’s why they deal with me.  They don’t deal with me because I am a good golfer (because I am not), or that I am a good tennis player (because I am not).  They deal with me because of my character and my intellect, which has really been my selling point, and that’s just who I am.

If there is any piece of advice you could give to someone seeing this interview right now who is possibly thinking about coming to your business for insurance, what would you say?

This is a very difficult business.  It’s a business that requires you to constantly be bringing in new business.  There is no bad year; you have to be out there hustling all the time.  To be really, really good in this business, you not only you need to be able to be a very good salesperson, you have to be technically competent, you have to have great marketing skills, and there is a lot to it.  In my business, there is like 1% and there is 99%.  I feel like I am not the only one in that 1%, but I am in that 1%, and there is such a difference between that 1% and other 99%.  You would think that most affluent people would only be dealing with that 1%, but it’s so far from the truth.  There are so many affluent people that I run into that the people they are dealing with in my business are from the 99%, not the 1%.  They just don’t understand what the difference is; until they meet somebody from the 1%, they don’t really know what they are not getting.

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