The two largest organizations of financial planners are looking at ways to give members discounts on several kinds of insurance.
The Denver-based Financial Planning Association is talking to carriers about providing health insurance at a group rate to financial advisers, though it has had difficulty finding a national program for its 27,000 members, said Sandy Januchowski, assistant director of marketing.
“One of the things that we've heard would really increase members' value is providing a group health insurance plan,” she said. “It's hard for advisers to find quality carriers, and we want to bring it to them at a savings.”
The FPA offers discounts on group long-term disability insurance, errors and omissions insurance, identity theft protection and auto insurance.
The National Association of Professional Financial Advisors of Arlington Heights, Ill., also offers long-term disability coverage to its 2,000 members and is pursuing other coverage.
“Long-term, it's important for us to offer group health insurance,” said Nancy Hradsky, special-projects manager at NAPFA.
“We've spent untold hours talking to people about this,” she said. “From an insurance perspective, you have to be able to prove you can put together a pool that can be insurable.”
Since the end of 2007, about 600 NAPFA members and their employees have enrolled in the disability program.
Many advisers receive insurance at favorable rates from their broker-dealer or custodian.
Bob Fragasso, founder of The Fragasso Group Inc. in Pittsburgh, which does business as Fragasso Financial Advisers, buys E&O insurance through his broker-dealer, Boston-based LPL Financial, and pays $577 each quarter.
“The LPL legal department negotiates this, and we know we're getting the kind of coverage we need,” said Mr. Fragasso, whose firm manages nearly $600 million in assets. “That's not necessarily true when you negotiate on your own.”
But Mr. Fragasso said that advisers need to make sure that they understand the rules of these discounts.
For instance, the E&O insurance he has secured through LPL can be used only for the firm's investment-related operations. Mr. Fragasso has to purchase separate E&O insurance for anything non-investment-related.
LPL also has discounts for health insurance, but he chose another plan through an insurance broker.
“Advisers need to shop around for insurance, but a knowledgeable broker is a better shopper,” Mr. Fragasso said.
All insurance costs are steep, but George Jackson, an adviser who operates Jackson Retirement Planning Inc. and Jackson Wealth Management LLC in Orlando, Fla., said he realizes that offering excellent health insurance coverage helps him retain employees. He said he pays about $30,000 annually in health insurance premiums for six employees.
“It's very expensive, and I hate paying the bills, but these employees are very valuable to me,” said Mr. Jackson, who manages $200 million in assets.
“I was chintzy on benefits in the past, but employees will leave for better benefits,” he said. “It's costly to have turnover.”
E-mail Lisa Shidler at [email protected].
