Success as a Financial Advisor For Dummies

Chapter 9

Delving into Liability Management

IN THIS CHAPTER

Calculating the dollar value of risks

Using insurance to reduce financial risks

Preparing for unforeseeable financial misfortune

Getting compensated for risk management

Liability management involves making sure your client has enough insurance to cover the cost of any big-ticket surprises, such as serious illness, property loss, or death of a major breadwinner. Think of asset and liability management as your team’s offense and defense. With asset management (see Chapter 7), you’re trying to gain ground. With liability management, you’re trying not to lose ground.

Although clients typically get more excited about maximizing their assets, you need to remind them of the importance of protecting against losses. After all, a single unexpected tragedy has the potential to completely devastate a high-performance portfolio.

Including liability management discussions with your asset management clients is important. Without effective liability management, your client could lose everything or, at the very least, suffer a loss greater ...