Evan Jehle, CPA/PFS, Partner and COO at FFO LLC, a premier Business Management Family Office company.
When forging long-term financial management objectives for ultra-high-net-worth individuals, the modern multifamily office should always prioritize implementing effective risk mitigation strategies. From helping install iron-clad cybersecurity operations to safeguarding key credit information, these elite wealth planning teams best serve their clients by playing effective defense on a variety of fronts that are beyond their usual scope of accounting services.
Now more than ever, this defensive game plan must include comprehensive property and casualty insurance solutions. As we have been reminded during the conflagrations that severely impacted the greater Los Angeles area this past month, our homes and most prized possessions can be taken away from us in an instant. Whether from uncontrollable wildfires on the West Coast or increasingly powerful hurricanes east of the Mississippi, a steady increase in devastating natural disasters has made securing the right insurance coverage even more pressing—and expensive.
As numerous industry observers have noted over the past few years, many insurance companies are responding to worsening natural disasters by either increasing property and casualty premiums to historic highs, offering plans that do not provide full coverage or simply exiting certain regions of the country altogether. While this crisis is having an outsized impact on retail consumers, these unprecedented, ever-quickening shifts in the marketplace are leaving even ultra-high-net-worth individuals scrambling to secure comprehensive, cost-effective property and casualty insurance plans—too often in vain.
With this instability and inaccessibility spreading throughout the marketplace, it has never been more important to have an elite wealth planning team to effectively manage a property and casualty insurance portfolio that bolsters long-term wealth preservation strategies. By working with trusted industry partners to help clients navigate this increasingly difficult terrain, forward-thinking multifamily office advisors must prioritize identifying cost-effective solutions and implementing detailed recordkeeping systems that can make a real financial difference if tragedy strikes.
In the face of this historically challenging insurance environment, the elite wealth planning team is vital to helping shore up these potential liabilities by leveraging connections within the industry to help secure coverage to provide as much protection as possible. Whether it’s working with trusted agents that can go beyond standard forms of coverage or dealing with associates that can provide bespoke plans that are not widely available, multifamily offices that can access their extensive contacts to take on these difficult blocking and tackling techniques are vitally important in this marketplace. In cases where securing adequate insurance protection is not possible, however, effective wealth planning teams are vital to pinpointing potential areas of vulnerability and finding innovative ways to help guard against weak spots—including ensuring that clients build rainy-day funds for those specific purposes.
Even if you ensure that your clients are fully prepared for a variety of worst-case scenarios, the modern multifamily office advisor must also understand that effective recordkeeping can be the difference between clients being made whole or having to fork over millions of additional dollars to rebuild their lives. For instance, if clients’ files related to their home insurance policies are either stored in cabinets or on computer systems that happen to be destroyed in an accident or natural disaster, it could mean that an insurance company might not honor the full amount of their promised coverage. While it might sound trivial, working with an elite wealth planning team to ensure that key files and policies are properly safeguarded, organized and easily accessible can make all the difference in this kind of worst-case scenario. Executing these necessities early in an onboarding process helps ensure that your clients can have this invaluable peace of mind.
Although no risk mitigation strategy can eliminate all potential dangers, the modern multifamily office manager needs to understand that effective, expert insurance portfolio management is still the most effective defense for their ultra-high-net-worth clients against a variety of disasters. While there are many financial planners who can execute an array of aggressive wealth generation strategies, the most effective advisors not only understand the need to forge a comprehensive property and casualty insurance portfolio, but also have the experience required to deliver this essential service when the conditions are tough and the stakes could not be higher.
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