eSigning Split Dollar Agreement Made Easy

Esigning split dollar agreement

good afternoon everyone this is Michael Deaton with Lincoln Financial and excited to be joining you here on this what is to be in with Carolina a very hot and humid Monday afternoon but I am a business insurance consultant and again excited to be with you all for the next short while to talk about business life insurance planning and really our role our team's role here at Lincoln our business insurance solutions team really is to partner with you and your practice to 1 identify business insurance opportunities provide design support and illustration support but I think most importantly it's that consultation pede that our team really kind of brings to your practice as a partnership it's really going to help you be more successful in closing business insurance opportunities so in today's half-hour presentation what we're going to talk about is the business insurance opportunity you know the small business owner marketplace and the opportunities that are bound there we're going to talk a little bit about the pillars of risk management that we find associated with business insurance planning and lastly the the hardest part which is engaging our business owner clients you know how do we you know go across the table where maybe we been historically focused on personal financial planning to really be engaging with these personal clients now in a business owner setting so again focusing on on the opportunity talking about the three pillars of risk management where we focus our time and effort on the compensation piece and then lastly you know kind of working with that client engagement you know how do we move these conversations forward so I just wanted to share some a couple of statistics with you that really kind of start to paint the picture of why we think you know business life insurance planning is a pretty significant opportunity for insurance professionals advisors looking to grow their practice twenty-eight point eight million that is the number of small businesses in the US if you kind of look at that on a micro scale that's forty eight percent of the private-sector employment and we've got close to fifty seven million small business employees now I just want to be fair to that number you know half of these businesses are likely to be structured as sole proprietors but you know as we often discuss with our producers and our intermediaries regardless of the size or scope of the business there are plenty of opportunities to begin planning discussions with small business owners so as a target market a small business a small business market really has shown itself to be in a state of stability and in and in some cases we're finding that small business owner that marketplace really kind of on a growth trajectory and so from what we've gathered or garnered really from limo studies is that those financial professionals that are actually engaging with small business owners and capitalizing on those opportunities really what we're finding is it it's an underserved market so again what we want to help do from not only the educational standpoint but from the partnership standpoint on the sales perspective is really helping bring an awareness that kind of spent developing an expertise in this market will undoubtedly result in bigger opportunities and hopefully deeper relationships with those business owner clients so we've talked a little bit you know here about painting this picture you know of an abundance of opportunity but you know let's talk about business life insurance you know as you can see you know business life insurance can take on a number of different forms and these are terminologies or fancy names if you know that you've probably seen or come across before in your practice you know key person executive bonus deferred compensation loan regime split dollar you know basically there's an entire universe of business insurance concepts and strategies and quite frankly you know that we really know that there's dozen or you know there's variations of each of these strategies that we see but you know bottom line you know it's a lot in sometimes as we're approaching these conversations it can be complex but what we want to help you recognize is that you have a partner really with Lincoln to help you navigate this universe and as we'll talk on a little bit later these are just fancy names for solutions but that really brings me back to two really foundationally what we do as insurance professionals as financial advisors as a part of our practice at the core of what we do in the products that we use we really find ourselves grounded in the basics of principles of risk management so if we are you as the advisor can really engage with your business owners and help clients identify what their risks are and where there may be gaps in their current risk management plan then really one if not many of these solutions that we see here on the screen will naturally kind of surface up you know to a viable way to help that business owner manage the risk that we'll talk about shortly so you know again what we're wanting to do is help business owners understand the inherent risk of not planning and what that impact could be to their business growth and we're continuity of their business and once we have helped establish a foundation of that understanding then again the process of identifying and guiding our business under clients to the appropriate solution really becomes much easier on ourselves a financial professional we find that as financial professionals are engaging with business owners as oftentimes risk management is not necessarily one of their top focuses but as we talked about what we do with business planning business life insurance planning is grounded on those principles of risk management so we really have to be engaging our business owners with really this disturb if you will we know that their day is consumed with you know sales goals or operational nuances employee engagement but at the overarching kind of idea of what could be a key driver of again business growth or continuity could be risk management and we kind of find that there's three core pillars of business life insurance one for taking the business from the death of a key employee two retaining rewarding and recruiting top talent and three efficiently transferring business interest amongst business owners you know essentially what we're talking about there is by cell planning so why should they be concerned about protecting the business from the death of a key employee well what we are doing is ultimately trying to educate that business owner around that loss of that key employee to a premature death or disability what can that do to to the revenue streams what kind of client relationships does this key employee have that if we lost them unexpectedly would do to our you know sales goals you know or you know so what kind of disruption and financial burdens does it put on the business and ultimately you know helping quantify that and helping the business owners identify those key employees in that organization that are instrumental in driving either that business growth or in some cases providing a continuity to the business so why should business owners be concerned about retaining and rewarding the recruiting top talent well if you think about why we're educating them on the importance of protecting their business from the loss of a key employee and the event of a death or disability I think equally as catastrophic if not even more so is potentially losing that top talent to competition you know again looking at those key employees that are drivers of growth and development of the business if we lose in the competition what kind of impact you know is that going to have from a recruiting standpoint you know do we have the right compensation packages in place to make sure that we're gathering or putting ourselves in the best position to obtained a skilled executive workforce and especially in the small business owner marketplace what you'll find and I'm sure you're seeing it is you know certainly though these larger business entities have certainly a more robust benefits package you know that they're able to go out and position themselves to read to reward and recruit top talent much more handsome Lee so how do we our small business owners compete and retain the top talent that they have and again it's part of painting that picture of disturb you know helping them quantify in some cases what the impact of losing those key employees are and then lastly what we're really helping business owners address is really that continuity of the business making sure that we're helping that business owner you know transfer their business interest efficiently and successfully and again that's really beginning the foundations of that buy so planning process but in conjunction with that by so planning process we want to make sure that one you know our business owner has a process and a plan in place and then even though as financial professionals we're not necessarily engaged with the you know legal documents that oftentimes formalize a you know mysel agreement we can't be that advisor or counselor if you will to be guiding our business owners through that process that begins with one you know establishing a fair market value you know working and bringing to the table you know the qualified CPA or business valuation specialist that can help you know make sure that as we look to exit our business at whatever point in the future that may be and under whatever circumstances that our business is going to carry a fair market value that is accessible and palatable to that business owner we want to make sure that in that same process that we're identifying you know how we're going to be exiting our business do we have in the organization itself today key employees that may be our succession plan are is our intent to sell to a third party or are we going to pass our business interest down generationally to the next family member so again the identification of who is going to be taking over the business that continuity piece and then lastly it's all well and good to have a buy-sell agreement and at vacation of parties to ensure that business interests are transferring but oftentimes what we're finding and hearing from advisors as they're approaching their business owner client really they hadn't addressed the funding component and that's really where the opportunity as insurance professionals as financial visors really is where we're able to deliver a particular solution or strategy in conjunction with what the recommendations of the accountant and lawyer to really bring it all together so that not only do we have a formally drafted document that we've got an appropriate valuation established we've got identified parties but isn't the event of a triggering event IB it's death benefit excuse me a death event or premature disability of a shareholder or key stakeholder that we've got insurance solutions in place that help you know maintain that continuity and then also ensure that you know the successors and beneficiaries of those business owners obtain fair market value considerations in that transfer so where do you start with the business owners so we've talked about the opportunity we've talked about essentially the three pillars of risk management but where do we start with our business owner in a colleague of mine kind of came up with this analogy of using an oxygen mask so I'm assuming many of you on the phone here today have hope maybe flown on a flight at some point your life that might be a generalized assumption but you know if you haven't one of the things that the flight attendant during pre takeoff emphasizes and there there's a little spill of making sure you buckle just your seed and you know bags are certainly securely placed as you know they emphasize that this phrase in the event of an emergency to cure your mass first before helping others so that again in the event of an emergency secure your mask first before helping others and so really what my colleague was really trying to depict in this analogy is really that we need to be approaching our business owners engaging with them first and foremost about what it is that it is their exit or succession plan what is their retirement plan so a lot of times you know we'll find that cases have developed and they want to talk about executive compensation or or key person identification really we need to be focusing conversations first and foremost with that business owner and making sure that we're protecting their retirement securing their retirement first and again it's not always an easy conversation but again it's one that is going to be self-serving because once we identify what their exit plan then some of the other pillars of risk management for the business can ultimately start to take shape because sometimes is what see in just a moment that the exit plan that retirement may be contingent upon the sale to a key employees so all of a sudden now what started as a buy-sell conversation with our business owner now has transitioned into key person discussions and executive benefit plan so again how do we help our business owners begin and engage in that by cell planning process well again it's you know making sure that we've got a proper valuation documenting an agreement and making sure that that agreement is properly funded and again that latter part really is where the opportunity is for us as insurance professionals to find the right funding and product solutions to help manage that risk for those business owners as we look to help them exit or retire from their business so how do we take that conversation and really unlock the life insurance opportunity that's what we're looking for here obviously is not just the opportunities to engage with business owners for for casual conversations you know we're here as insurance professionals and looking for opportunities to grow our practice and help put solutions on the table for our business owner clients so we talked about first securing that business owners exit a retirement strategy first and once you've done that then naturally the question then becomes if you could essentially close up shop tomorrow you know think of it this way if it's a very simplistic way of transitioning a conversation where we started first with that buy sell exit planning to an executive benefit decision tree if you will so common way to address this that seems to be very simplistic is mr. mrs. business owner if you had to close up shop today and move across the street who would be the one key employee that would take you take with them who is the one key employee that is integral to the success and development and growth of your business once you have that you could kind of expand it to who are the two or three people that you would take with you if you had to close up shop and move across the street so what are we getting at we're getting at key person identification so now the suddenly we've moved the life insurance opportunity from the buy/sell funding solution to make sure that business interests are transferred efficiently now we're also identifying key person helping that business owner begin the risk management conversations around what it could mean in the impact to that business that they lost the key person to death or disability conjunction with that often times again if we're looking to identify key person and the financial impacts of losing them to a premature death or disability ultimately that's going to align with an executive benefit or executive compensation discussion so if if I as a business owner come to a key employee and say hey we really value what you bring to the table you're integral to the success and development of my business I want to place life insurance on your life it's a common thought or what we are hearing from the field that keep employee really is going to go back to the business thing and say what's in it for me you know you're telling me you're valuable that if I pass away or become disabled but what's in it for me if you're going to do this and I'm pretty helping you protect your business what's in it for me so you see this natural progression of one starting with the business owner and helping them secure their retirement their exit strategy identifying those key individuals that are again going to be key drivers of the business growth and continuity and then ultimately transitioning that conversation over the executive benefits and all of these really kind of tie together back to those three pillars if we lose key employees we may not be able to successfully fulfill our business owners exits and retirement strategy if we don't have the right executive benefits we may lose our key employees to competition so interrelatedness between these three pillars oftentimes what we find when we're designing solutions in partnership with you and your business owner clients is that what may look and feel like a traditional buy sell may oftentimes evolve into a multi-faceted solution and that's really where you know our job as consultants is to really kind of help navigate going back to what we talked about earlier that universe of solutions and how can we help you you know once the needs are identified really address the the solutions and product and even underwriting platforms that risk management for your business that much easier making the business insurance planning process more integrated and lastly making you a more successful advisor so what we're going to be doing over the next couple sessions is we're going to do a deeper dive into buy sell exit planning and kind of partner that with key person risk management insurance planning and then the last session that we'll cover really is going to be executive compensation focusing on those types of reward strategies that can not only help benefit key employees but can also in some cases help our business owners depending on business tax structures and objectives so that's really what we wanted to cover in terms of this overall business insurance counseling series but we ultimately know that as you're going out there and trying to find opportunities you know in bringing information to the table for discussion it ultimately starts with the discovery process so we've got fact finders case studies educational materials that we can arm you with that really help you all engage with your business owners and in capturing the relevant information and objectives of your business owner clients we don't want to go down the route of you know addressing buy sell planning to the nth degree if that's something that they've already successfully accomplished so we want to make sure that as we're approaching them that we're doing a thorough FAQ find and that really is going to help us be much more efficient in the consultation and then again identifying through that universe of opportunities solutions that are going to be most effective and most efficient in addressing the need so again just wanted to lay a foundation today of what business life insurance planning entails we talked early on about the small business owner marketplace really an area that is underserved from the financial advisors community so certainly an opportunity to be first amongst your peers to be engaging with business owners and again we know that transition from that personal conversation to the business insurance conversation is not always an easy one to navigate we certainly hear can partners consultant on that we talked about the three pillars of risk management you know protecting the business from the loss of the key and police of key person planning and helping business understand owners understand the impact that a loss the key employee can have on the business we talked about exactly compensation and the need to put forth benefit packages and reward strategies that really are designed to retain top talent and not lose it to competition and lastly we talked about you know efficiently transferring business insurance you know a business interest using and ultimately you know here at LinkedIn you know we're really that partnership and extension of your practice if you will to make sure that you're successful in navigating those but at this point in time I wanted to stop and appreciate everyone joining today and certainly open it up for questions as we kind of tee it up for the next two sessions where we'll be digging a little deeper into these core areas of risk management by cell planning and keepers in our next session and executive compensation in our last if anybody has any questions I believe there is a chat box in the meeting session any questions from those on the line today if you do have questions and if we're having technology issues feel free to reach out to Alan frisbee with any questions I'll make sure that we can get those address you can also email me my email address is michael mi CH AE L Deaton DEA gon at LSD comm I'll certainly make sure to get any questions addressed to you promptly greatly appreciate everyone's time today on the phone and certainly look forward to kicking off a deeper dive into by cell and key person planning on our next call I hope everyone has a great rest of their Monday afternoon and we'll look forward to talking with you again soon