XXX

To the uninitiated, my recurring lamentations regarding the implications for policy sellers of life settlement brokers’ flawed market engagement and opaque, egregious commissions may sound like exaggerations or just a guy screaming at kids to get off my lawn. But, I assure you, they are not.

Below are two examples of the “fiduciary” representation (except how the broker is compensated??) and of the calculation of fees, excerpted *verbatim* from a contract between a policy seller and one of the largest brokers in the market. Could you tell your client how they will pay?

“XXX and your referring advisor, if any, represents only you and shall act according to your instructions and in your best interest notwithstanding the manner in which XXX and your referring advisor/broker, if any, is compensated.”

“Total compensation payable to XXX and your referring advisor, if any, shall collectively not exceed a maximum of 8% of the Net Death Benefit (NDB) of your policy. Proceeds of your life settlement are represented by the Net Purchase Price (NPP) as follows: NPP = Gross Purchase Price (GPP) as paid by the life settlement provider reduced by the total compensation as described above.”

So, assuming a $5,000,000 policy w/ $0 surrender value and a winning bid of $1,000,000.

8%*$1,000,000 = $400,000 commission --> net benefit to seller of $600,000

But, a broker might say, “Hey, I won’t charge more than 33% of the value!”. Ok, great. Instead of the $400,000, the broker will “only” receive $333,000…net benefit to the seller of $667,000.

In what world does an intermediary receive compensation of this magnitude? Only in the life settlement market and without an advisor looking out for your clients' interests – and brokers wonder why the market never grows beyond <10% of the opportunity. It’s not rocket science, advisors looking out for their clients’ interests simply cannot engage the market for their rational distaste with egregious, indefensible broker commissions.

How does our fee description read? “1908 will receive a fee of 7.5%*(Gross Proceeds – Surrender Value) after your client has received their proceeds from the Provider.” (Note: If you're an insurance producer, you and we split 50/50 a fee of 10%.)

So, in the above example, $75,000. Net benefit to the seller, your client, of $925,000. Simple. Easy to understand. Because we are not trying to obfuscate or obscure otherwise indefensible fees.

Please visit us at www.1908advisors.com to learn more about how we are changing how fiduciary wealth advisors and fiduciary-minded life insurance professionals engage the market for in-force life insurance on behalf of their older HNW clients who have life insurance that you and they assess no longer makes sense to maintain.