It’s no secret that expanding your offerings is a great way to grow your business. This is the primary reason many financial professionals focus on a multidiscipline approach to their practices.
However, expansion doesn’t just mean going from concentrating solely on life insurance to providing estate planning and wealth transfer services, as well. It also applies to the types of clients you court.
Creating an international reach
Forbes recently detailed how high-net-worth foreign nationals are attracted to U.S. life insurance policies thanks to the unique benefits they can provide.
The source stated that for high-net-worth international clients with no ties to property ownership in the U.S. – and who require a large amount of life insurance that may not be available in their country of residence – U.S. Dollar denominated policies are quite appealing.
No matter where their wealth originates, foreign nationals can help protect it with a U.S. life insurance policy. The fact that these life insurance policies are denominated in U.S. dollars and are currently exempt from U.S. tax withholdings on gains also represent attractive qualities for international clients.
Opportunities are growing worldwide
According to the 2014 World Wealth Report from Capgemini and RBC Wealth Management, global high net worth ranks increased by 15 percent. Meanwhile, wealth levels reached a second consecutive high.
This comes on the heels of global high-net-worth individual wealth rising 14 percent in 2013, reaching a record high of $52.6 trillion.
Approximately 2 million people became high-net-worth individuals during 2014 – a large pool of potential new clients for insurance producers. While North America took the No. 1 spot for wealth growth, there were also significant gains seen in Europe, Africa, Latin America, the Middle East and the Asia-Pacific region.
Perhaps even more interesting is the fact that high-net-worth individuals around the globe have become more open to investments outside of their home countries.
“High-net-worth individuals demonstrated a more global mindset, allocating over one-third of their wealth outside their home region in early 2014, up from 25 percent in 2013,” the report stated.
The future growth of global high-net-worth individuals is only set to continue. It’s estimated that global wealth will reach $64.3 trillion during 2016. This will be due in large part to growth in the Asia-Pacific region, which is set to see wealth increase at a rate 1.5 times the global average.
While it can be exciting to think about the growth potential for your own business based on appealing to foreign nationals, it’s also vital to fully recognize how and when your services can be used.
“These life insurance policies are not applicable if the wealthy individual is a U.S. citizen or legal resident with a green card,” Anthony J. Carone, managing member of the specialty law firm Carone & Associates, told Forbes. “They’re also inappropriate if the affluent non-U.S. citizen has financial U.S. ties such as real estate holdings, a U.S.-based trust, bank accounts, and equity interests in private businesses.”
However, if an international client does qualify to use your services, you should focus on what you can provide to suit their needs.
Appealing offerings for foreign nationals
First and foremost, U.S. life insurance represents a valuable tool for foreign nationals. Not only does it allow them to preserve wealth for future generations, it doesn’t have to be subjected to U.S. income or estate taxes. Income replacement insurance coverage is another area you may want to focus on, as this can provide foreign nationals with an extra layer of protection for their loved ones.
Another factor to remember is that many foreign high-net-worth individuals are themselves business owners. This makes your business succession planning expertise another potentially prized capability.
However, the specific products and services you offer must also be supported by a simple and straightforward application process. Foreign nationals will have more regulations to keep in mind and obstacles to clear, so it’s important to balance additional financial underwriting requirements and other considerations while providing clients with a pain-free process.
Changes in customer focus the new norm
If pursuing new business from foreign nationals is a strategy you hadn’t previously considered, keep in mind this is just an offshoot of recent trends regarding changes in customer focus.
“According to the insurance executives we surveyed, the top three “drivers of transformation” over the next three to five years are customer demand (52 percent), coping with change in technology (45 percent) and domestic competition (42 percent),” KPMG reported in 2014.
Under customer demand, KPMG cited changes in customer focus as a primary aspect of this transformation. Changing your focus to a practice that welcomes foreign customers may be just the ticket to transforming your own business for the better.