Agents I’ve spoken with since the election seem to be divided into two distinct groups thinking about marketing in 2025. One group acknowledges that the Republicans ran the table but won’t accept as a forgone conclusion that the estate tax exemption won’t sunset after this year. They tell me that they’re looking forward to 2025 as a year when prospects will do a lot of estate planning and buy a lot of life insurance in anticipation of the sunset. The other group isn’t buying that point of view. Without taking a hard and fast position on the sunset, they’re trying to figure out how to broaden their approach to prospects to make it less estate tax dependent.
I don’t have much to say to the first group. They have their story, and they’re sticking with it. I do have some suggestions for the second group as they work to fashion a more holistic approach to prospects in this estate tax uncertain environment. So, let’s assume that you’re an agent working primarily in the closely held business succession market. For the sake of a tight storyline, we’ll assume that you’ll meet with a successful family business owner who’s already gone through the “keep versus sell” decision and plans to keep the business in the family.
If we were to have a conversation about how you’ll approach this prospect, here’s what I’d ask you and what I’d listen for.
Three Points to Address
In a year when the usual estate tax liquidity sales track won’t resonate with prospects, where do you start in your effort to get them to identify and open up about any concerns they may have about succession? In my experience, these prospects often have an almost linear set of concerns they’re anxious to discuss. And, conveniently, estate taxes are never at the top of that list. They want to talk about far more proximate and personal concerns. With that in mind and with fact-driven variations on the theme, your approach talk should probe into at least these points:
- “To what extent should your surviving spouse be financially secure independent of the business?” In my experience, this is a top-of-mind concern among many business owners, who often have to interject it themselves into the conversation with advisors otherwise laser-focused on wealth transfer planning.
- “What are your and your spouse’s thoughts about equalizing inheritances among children involved in the business and those not involved, allowing non-business children to own part of the company, and so forth?” These topics are often years in the making and even more years in their resolution, if they’re resolved at all.
- “Planning now for any estate tax that might be due when you and your spouse have passed away could be premature, as much will depend on what happens with the tax law after 2025, the extent of other planning you’ll do and so forth. But we should take just a moment to talk about how that aspect of your planning can be seamlessly and efficiently coordinated with the other matters we’ve discussed when the time comes.” Closing with this “estate tax liquidity placeholder,” which you could undoubtedly phrase differently, will show that you’re objective, a good listener and a student of the business.
A Common Thread
There’s a common thread running through these topics. It’s life insurance. So, I’ll ask you to tell me how you illuminate the roles life insurance can play in serving the needs and objectives of each topic. I’ll ask you how you show the prospect that life insurance can do for them what they may not be willing to do for themselves with far more complicated planning and rearranging of their affairs. If you can’t do this, neither the prospect nor you will be well served. The prospect won’t be well served because you’ll gloss over or miss entirely a conversation about things that are not only truly problematic for them but also can be integral components of the solution to other issues. And you’ll lose the opportunity to show the prospect and, importantly, the advisors how one well-structured, well-packaged policy can neatly and efficiently address more than one need.
Don’t Just Collaborate. Lead.
There’s another important reason for you to be adept at conducting this conversation. If you’re part of a “planning team,” it’s unlikely that you’ll be sitting at the head of the table and leading the discussion. In fact, it’s far more likely that you and the illumination of the role of life insurance in the plan will be relegated to the tail end of the discussion when the others have implemented their planning techniques and now it’s time for life insurance to deal with any remaining liquidity issues. This scenario deprives the client of an intelligent discussion about whether they’d prefer to address certain issues with complicated planning or some relatively less complicated life insurance. It’s also a scenario that calls for you to go beyond collaborating with the other advisors to take the lead. That’s because, especially in an estate tax uncertain environment, the experienced life insurance agent may be the advisor most ready, willing and able to conduct a dialogue with the prospect and, critically, provide the forward momentum often needed to bring the case to conclusion. Don’t worry about the politics. Worry about doing right for the prospect.
Other Markets
Although I focused on family business owners for the sake of a tight storyline, they’re hardly the only type of prospect in the advanced markets for whom an estate tax-centric approach could be ill-advised in 2025. If our conversation were to turn to corporate executives, for example, I’d ask you a parallel set of questions about your approach talk. I’d ask how you employ the concepts of visualization and optionality to enable the executive to “see” two things rather clearly: (1) whether their current life insurance program is adequate today for their needs and aspirations for the family; and (2) how having a well-funded policy in place at retirement can provide flexibility to make decisions about valuable compensatory and benefit plans and programs that they won’t otherwise have without insurance. Yes, you’ll set down that placeholder for the estate tax discussion, but in a context that again shows your objectivity and professionalism. See, you may not need estate taxes after all!
