Trump's social-media saber rattling spawns fresh look at 'apocalypse insurance'

Advisers should be fluent in how to hedge client's various risk exposures

Jan 5, 2018 @ 10:27 am

By Jeff Benjamin

As uneasy scenarios go, there is nothing quite like watching a U.S. president engage in a social media squabble with the leader of North Korea over which country has the readiest access to launch nuclear bombs.

But does such an early January Twitter blast from President Donald J. Trump, who has shown a clear penchant toward flamboyant social media rifts, mean investors should be ducking for cover and financial advisers should be scrambling to protect their clients' assets?

It depends on your perspective.

"Now that Trump is in office, some of the liberals are looking for alternatives to a risk that something like 2008 could be multiplied two or three times, but when (former president Barack) Obama was in office, some folks were also worried about the country going to hell in a handbasket," said Angelo Robles, founder and chairman of the Family Office Association.

With that in mind, Mr. Robles talks at least figuratively about the appeal of so-called apocalypse insurance, which he describes as a "vague term that means different things to different people."

In reality, Mr. Robles fully appreciates that any kind of apocalypse insurance would have to involve something less than an actual apocalypse, otherwise there would be no point.

However, he also appreciates the notion that risk is often in the eye of the beholder, which is why he believes financial advisers should be fluent in ways to hedge their clients' exposure to less-than-apocalyptic risks.

Short of Lloyds of London, which pops up as the go-to insurance solution for just about any kind of extreme coverage for a hefty premium, Mr. Robles said the ultra-high-net-worth set have become increasingly open to reducing exposure to what they view as increased levels of risk.

Depending on the degree of risk one is trying to guard against, Mr. Robles said individuals might want to consider maintaining dual citizenships, buying gold, holding cash, and diversifying assets with both U.S. and non-U.S. institutions.

"If you're going to be that paranoid about how things could go wrong, literally having cash, gold, and owning income-producing companies, as opposed to public securities, would be best," he said. "Own things like land and art, that may not be as liquid, but could withstand the test of time in court."

(More: Heading to Canada? Consider the cost)

Short of a nuclear war, which might qualify as apocalyptic, Mr. Robles cites the risks of a something like a regional power-system collapse, or a "tsunami destroying Wall Street."

"A very wealthy family could go to Lloyds of London and really propose anything, because if you're willing to pay for it an actuary could effectively create anything," he said. "They may not like the premiums, but they likely could have some form of insurance against the risks."

For its part, Lloyds of London confirmed that it does not "use the term apocalypse insurance," according to a spokeswoman for the London-based insurance and reinsurance conglomerate.

However, said Lizzie Lowe, Lloyd's North American spokeswoman, "our innovation and research team does quite a bit of research" on topics related to business blackouts, electrical-grid risks, and the use of chemical, biological, radiological and nuclear weapons by non-state actors.

Tossed out randomly across the broader financial planning landscape, the notion of apocalypse insurance draws some sardonic reviews that will hopefully lift the heavy cloud of apocalyptic concerns.

"I think I'll sell apocalypse insurance, and when the zombies come, I'll protect you," said Leon LaBrecque, managing partner and chief executive at LJPR Financial Advisors.

"Merely make your way to my revised Atlas missile silo with 10,000 bitcoin and the secret code words," he added. "You may find that I have taken your money and bought the S&P 500 and have been living large since we didn't have the apocalypse."

Kristin Sullivan, owner of Sullivan Financial Planning, said if you're worried about a "nuclear war or zombie attack," you should "invest in guns, heirloom seeds and making yourself valuable somehow."

"Learn how to fix stuff, grow food, or learn hand-to-hand combat," she added. "Your accounting skills won't be very useful."

Or, you could just stop following the president's Twitter account.


What do you think?

View comments

Recommended for you

Upcoming Event

May 14


Retirement Income Summit

Join InvestmentNews at the 12th annual Retirement Income Summit - the industry's premier retirement planning conference.Much has changed - and much remains to be learned. Attend and discuss how the future is full of opportunity for ... Learn more

Featured video


The capacity conundrum: Why its hampering your growth

How do you get good next gen talent to your firm to help open up more capacity? Live Oak's Mike McGinley has the answer.

Latest news & opinion

Worst day of an awful year leaves no part of market unscathed

Stocks, oil and corporate bonds all plunged, while safe havens like Treasuries and gold stood still.

As it works to pull off a merger, FS Investments admits shortcomings

Management makes public statements about weaknesses at company's funds.

Q&A with Abigail Johnson and Kathleen Murphy of Fidelity Investments

The Fidelity CEO, along with the president of personal investing, discuss record earnings, allegations of sexual misconduct and the challenges facing a changing industry.

Fight for New Jersey fiduciary rule yields doomsday rhetoric from both sides

Stakeholders warned of a 'crisis' and 'decimation of our financial system' at a public meeting held by the New Jersey Bureau of Securities.

The Women’s Issue

News, video and expert opinion about women in financial advice


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print