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Case Study: The Profitability of Ethics

Friday, September 19, 2014

Ethics is often seen as skimming off a layer or two of the profitability of a business enterprise.  However, that’s a short-term view, says Steven Blum, attorney and veteran instructor at the Wharton School's department of legal studies and business ethics.  In the long run, Blum contends, adhering to the highest ethical standards confers a unique business advantage on financial advisors because it impels them to conduct their affairs with a discernibly different level of professionalism.

This allows financial advisors to stand out from the competition and foster a deeper level of client trust, which in turn strengthens both retention of satisfied clients and conviction-based referrals of their friends and associates.  The case study below shows that by documenting your professionalism and showing the depth and breadth of research with the credibility lent by Veralytic reports, the advisor can not only retain his existing clients but can also increase profits by proving they are ethical.

The CPA in the case study below while not the agent of record for the life insurance products, knows that he first has to take a measurement of what the client has inforce before he can have a conversation with the client to find out where the client needs to be.

Case Study1

  • Client had $650K of Current Assumption Survivorship Universal Life & $4M of Variable Universal Life insurance.
  • CPA requested Veralytic Reports on the existing insurance which returned 4 ½ stars for the SUL and 3 ½ stars for the VUL.
  • CPA reviewed the Veralytic Reports with the client and reviewed the client’s needs and found that the client needed more survivorship life for estate planning purposes.
  • With the Veralytic Reports, the advisor was able to prove his professionalism and the CPA kept existing advisor and the existing insurance and secured additional $18 million of insurance.
  • Veralytic Report showed the new proposed survivorship policy as a 4 ½ star policy.
  • The CPA brought to the client proof that the existing financial advisor was looking out for their best interest and the financial advisor was able to kept the existing policies, add new business and build a relationship with the CPA for future referrals.

In this case study the Veralytic Reports support the CPA matching empirical characteristics of product that is unique to the circumstances of the client. This case study shows how ethical advisors avoid questionable industry practices like those considered “misleading” by the chief regulatory body of the financial services industry, "fundamentally inappropriate" by chief actuarial body of the life insurance industry, and “subject to a high degree of fluctuation” and not reliable according to the OCC Handbook for life insurance.

Veralytic can help you show your clients that you are taking care of them in ways that even most insurance agents or brokers cannot. Veralytic is the only patented, objective and rules-based research tool that goes beyond the overly-simplistic comparisons of illustrations of hypothetical policy values that can be considered “misleading” and “inappropriate” by both financial and insurance industry authorities. Veralytic’s independent research reports provide a facts-based solution that is both compliant with industry regulations and established case law.

Veralytic is simply the fastest, easiest, and most comprehensive and cost-effective way to independently verify to clients and their advisors whether or not the pricing and performance of existing or proposed life insurance is in their best interest.  Only Veralytic is accepted for independent client representation, endorsed by the New York Bankers Association (NYBA) and compliant with industry regulations and established case law. 

Use the Veralytic Reports to determine the appropriateness of pricing, the reasonableness of performance expectations for invested assets underlying policy cash values, and overall suitability for your (client’s) policies based on the 5 factors of suitability.  Get up to 3 Veralytic research reports under our NO-Risk trial subscription.

1This case study is based on an actual client situation but is meant for informational purposes only. The case study is in no way intended to be used as a primary basis for insurance or investment decisions. Similar results are not guaranteed and will vary based the individual client situations. Clients should consult with their own financial, tax, legal, and accounting advisors before implementing any insurance or investment plan. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security or investment product. Guarantees are subject to the claims paying ability of the insurance company.

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