Grow and Plan: Advantages of Talking to an Insurance Advisor

There are a lot of options for getting personal finance advice these days, from amateur bloggers to automated “robo-advisors,” as well as countless professional financial advisors with varying degrees of expertise. But when it comes to questions about your financial future, it’s to your benefit to understand the advantages of an experienced, licensed insurance advisor — backed by an established company — who knows how to help protect what you have AND how to build for your future. Mutual of Omaha advisor Becky Nommensen explains why.

Why should someone looking for money advice turn to a financial advisor who is also an insurance agent*?

Becky Nommensen: It isn’t really an either/or kind of choice these days. More and more, insurance agents also are trained professional financial planners who can look at all the aspects of your financial life beyond your insurance needs. Plus, insurance agents have an additional advantage: in-depth knowledge of insurance products and the many different ways they can be used to augment other investment strategies, and how their clients can combine investment and insurance strategies to build a better financial future.

For example, if you consult with an agent who’s a certified Chartered Life Underwriter (CLU), that means not only is she a licensed investment advisor, but she’s mastered eight separate courses of study concentrating solely on personal insurance, life insurance and business insurance, in addition to all the other traditional financial strategies involving stocks, bonds and mutual funds. By working with a financial advisor who is also an insurance agent, you have access to the products and services that will help you implement the financial plan designed for you.

Can you give an example of an advantage of working with an insurance agent who’s also an advisor?

Becky Nommensen: Generally speaking, all financial advisors look at their clients’ current financial situation and advise on strategies to help them reach their goals, such as saving money for retirement, for example, or paying for their kids’ college, or buying a vacation home. These strategies typically involve two pieces: 1) Looking for a suitable way to invest your money in a portfolio of conventional vehicles, such as stocks, bonds and mutual funds; and 2) Advising on ways to use insurance to help protect the assets you already have.

An insurance agent who’s also a financial advisor is qualified in both areas and can directly sell you the insurance products that fit the strategy they recommend for you. A financial advisor who is not a licensed insurance agent will need to refer clients to an insurance agent to purchase recommended insurance products.

Managing risk is what a good insurance agent is all about. For example, younger investors might not think they need much insurance at all beyond covering their automobile and household possessions and a small amount of simple life insurance. Instead, they’re focused on long-term investing in stocks for a retirement that could be three or four decades away. A good insurance agent is going to point out that the biggest risk a young worker faces is becoming seriously disabled. In fact, more than one in four 20-year-olds will experience a disability before they reach retirement age, according to the Social Security Administration.1 Without disability insurance or substantial savings, those workers not only are forced to stop contributing to their retirement accounts, but often end up draining them to get cash until they can get back to work. In that case, their entire financial plan can be wiped out. A planner who understands insurance won’t ignore that kind of risk.

Every individual’s financial picture is unique, requiring its own balance between risk and risk mitigation. A well-rounded financial advisor can help you discover what your personal balance is.

What other financial risks can an insurance agent help clients avoid?

Becky Nommensen: As our lifetimes continue to lengthen, one huge risk that everyone worries about is getting to retirement age and not having enough money to live comfortably for 30 or more years after they leave work.

A smart approach to this issue is to look at how adding insurance to your investments helps lessen your risk by guaranteeing a safe percentage of your desired retirement income. Annuities are one example; they’re an insurance product that can guarantee a stream of payments that can start in retirement and last as long as you and your surviving spouse live. Though annuities payments continue for as long as you or your spouse live, annuities have inflation risk and are backed by the claims-paying ability of the issuing insurance company.

Adding that kind of risk management to your investing strategy helps prevent another kind of risk: volatility risk. Stocks can be used to help grow your money, but the endless cycle of ups and downs in the market can scare some investors into pulling their money out of stocks when they see a big market decline, which can result in huge investment losses. Knowing that you have a financial plan that includes an insurance strategy to help protect your assets can help you sleep at night — while you strive to keep your investment strategy on track, even when stocks take on losses.

What other benefits can I get by working with an advisor who’s also an insurance agent?

Becky Nommensen: If you own a business, are a parent to a special-needs child, or have complicated issues with passing on your money to heirs, there are a number of specialized life insurance products and strategies that can help you provide for your children and future generations and protect your business after you pass on. An insurance agent can guide you to those products that will help protect your wealth, reduce taxes and make sure your wishes are carried out. Or perhaps you’re self-employed. An insurance agent will know to review liability coverage with you, in case you’re sued in the course of your work.

In addition, insurance agents who work with large, established firms will typically have access to special products and features that aren’t available to a financial advisor. For example, money for expensive long-term care — where the median annual cost of a private room in a nursing home tops $102,000 a year2 — can be provided through a special long-term care insurance policy or even a life insurance rider, which some insurers don’t offer at all.

An insurance agent who’s also a financial advisor can provide a holistic approach to financial planning. It’s like consolidating your financial team from two people into one: Rather than having a financial planner and an insurance agent, you have one person who can do both jobs.

Learn more about how to find a financial advisor that may be right for you.


* In WA/OR, agent is producer.

Sources:
1 https://www.ssa.gov/pubs/EN-05-10029.pdf, July 2019.
2 https://www.genworth.com/aging-and-you/finances/cost-of-care.html, March 2020

DISCLOSURES
Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.

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